The total value of M&A transactions completed in Korea in 2025 amounted to KRW90.72 trillion, representing an approximately 82.8% year-on-year increase. The number of completed transactions totalled 691, up by 121 deals from the prior year. See the South Korea Trends and Developments chapter in this guide for further details.

See the South Korea Trends and Developments chapter in this guide for a discussion on key trends.

Several large-scale transactions in the energy and infrastructure sector took place as part of broader portfolio restructuring efforts by conglomerates. The cosmetics and beauty device sector also recorded a number of transactions, supported by the global popularity of K-beauty and the growth of the aesthetic medical device market. In addition, demand for M&A increased in the technology sector as companies sought to secure new sources of growth, including by expanding into AI and semiconductor industries.

The different methods of acquiring a company typically utilised in other jurisdictions – share acquisition, asset purchase and merger – are also available in Korea. Regardless of whether the target company is listed or unlisted, the most common form of acquiring a company in Korea is through the acquisition of its shares. The second most common form is an asset purchase, which has to take the form of a business acquisition if an entire business is purchased through an asset purchase. In the case of a merger, it is used mainly as a means of restructuring between affiliated companies and rarely used as a buyout method.

The reason why share acquisition is the primary tool for acquiring a listed company in Korea is due to the unique shareholding structure. It is often the case that listed companies have a controlling shareholder and thus public M&A transactions typically involve the acquisition of such controlling stake from the controlling shareholder through share acquisition. However, if there is no controlling shareholder, or if the acquirer intends to go private after taking over the remaining shares following the acquisition of the controlling shareholder’s shares, or if the acquirer intends to conduct a hostile takeover, a tender offer of a listed company is another means by which to achieve a takeover of a listed company in Korea. Tender offers are primarily regulated by the Financial Investment Services and Capital Markets Act (FISCMA).

In recent years, there have been legislative efforts to introduce other means of conducting M&A transactions. For example, in 2012, the Korean Commercial Code (KCC) was amended to introduce triangular mergers. Despite such efforts, triangular mergers have rarely been used as a means of acquiring a company since its introduction, primarily because amendments to other laws and regulations such as tax legislation that are necessary in practice to make use of a triangular merger have not been completed.

Regulation of M&A activity in Korea involves regulation of:

• foreign direct investment;
• foreign exchange;
• M&A in certain industries, including financial services, securities, insurance, telecommunications and defence;
• competition and antitrust matters;
• trading of shares of listed companies; and
• acquisitions of companies subject to bankruptcy or corporate restructuring.

Different government agencies have supervisory responsibilities over these regulations.

The Differing Agency Roles

The Ministry of Trade, Industry and Resources (MOTIR) oversees foreign direct investment in general while the Ministry of Economy and Finance and the Bank of Korea jointly regulate matters relating to foreign exchange. Additionally, M&A activity in certain industries (for example, financial services, defence, aviation, telecommunication) may be further regulated by the relevant government agencies supervising those particular industries.

In regard to antitrust and competition issues, the Korea Fair Trade Commission (KFTC) has responsibility to evaluate the potentially anti-competitive effects of M&A.

The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) are two primary regulators that oversee M&A activity by regulating the trading of shares of listed companies of the Korea Exchange through implementation of securities regulations.

With respect to distressed M&A transactions, courts oversee M&A activities of companies under bankruptcy or restructuring proceedings.

In Korea, the vast majority of areas and industries of business are open to foreign investment with only a few restrictions.

However, foreign investments in certain business sectors are restricted for national security reasons. For example, the Telecommunications Business Act provides that foreigners may not own more than 49% of shares in a core telecommunications company. Similar restrictions are also applicable to other sectors, including electric power transmission and distribution, education and defence. Furthermore, certain cross-border transactions are subject to review and may be restricted for national security reasons. For more detailed information, see 2.6 National Security Review.

Other than the rare cases of foreign investment restrictions mentioned above, foreign investment into Korea is a relatively simple process that requires satisfaction of certain filing requirements. If a foreign investor invests KRW100 million or more and either (i) acquires 10% or more of the total issued and outstanding voting shares or equity of a Korean company, or (ii) less than 10% but dispatches or appoints an executive officer to a Korean company, the investment will be considered as foreign direct investments (FDI) and subject to the reporting requirement under the Foreign Investment Promotion Act (FIPA). Foreign investments that are not FDI per the requirements above are treated as portfolio securities investments and are subject to a filing requirement under the Foreign Exchange Transaction Law.

The Monopoly Regulation and Fair Trade Act (MRFTA) requires the filing of a business combination report if, whether listed or unlisted, a party that has total assets or sales of KRW300 billion or more combines its business with another party that has total assets or sales of KRW30 billion or more, subject to exceptions that this filing requirement may still be triggered for certain transactions as stipulated under Article 19 of the Enforcement Decree of the MRFTA although the parties to such transactions do not meet the aforementioned thresholds. In calculating the total assets or sales of a party, the total assets or sales of all affiliates of the party that remain affiliated with the party after the business combination are aggregated.

The filing of the report must be made to the KFTC generally within 30 days from the closing of the transaction. However, transactions involving a large company group with total assets or sales of KRW2 trillion or more are, in principle, subject to pre-closing review by the KFTC. The statutory review period is 30 days from filing regardless of whether the filing is made before or after the closing. However, the KFTC, at its own discretion, may extend the period for up to 90 additional days, thus making the total possible review period 120 days. Further, if the KFTC makes a request for additional information or materials, the review period is tolled until the requested items are submitted.

In practice, when a transaction’s potential for restricting competition is considered minimal, the review period usually takes approximately 30 days. However, if concerns regarding competitive restrictions arise, the review process may extend to several months.

In Korea, there are no labour law regulations that require companies to obtain approval from their employees for share acquisition transactions, while in the case of business transfer transactions, in-scope employees are deemed to be transferred other than the employees who object to such transfer. Thus, in practice it is not uncommon to obtain consent of such in-scope employees in the case of a business transfer transaction. The terms of any M&A transaction must comply with provisions of the Labour Standards Act (LSA). Under the LSA, involuntary termination of employment is permitted only for “just cause” and an M&A transaction itself cannot be the ground for any involuntary termination, such as a lay-off, or restructuring. Satisfying the requirements under the LSA for such involuntary termination is considered difficult in Korea, which limits the acquirer’s ability to conduct any significant HR restructuring in connection with the M&A transaction.

Employment issues that investors may face in connection with M&A transactions include demands of the labour union relating to job security, bonuses, or concessions under collective bargaining agreements, discriminatory treatment issues between regular employees and non-regular employees and underpaid, or unpaid, wages or allowances. In particular, with the so-called Yellow Envelope Act scheduled to take effect in March 2026, managerial decisions affecting working conditions – such as those arising in the context of M&A – will be expressly included within the scope of labour dispute actions, and workers who are not directly employed (including those employed by subcontractors) will, subject to certain requirements, also be permitted to initiate labour disputes (see 3.1 Significant Court Decisions or Legal Developments). Investors need to conduct appropriate due diligence on these potential HR issues, all of which may have significant financial implications for the acquirer.

In order for a foreign investor to acquire a 10% or more share ownership in a defence company for a purchase price equal to or in excess of KRW100 million, the investor must obtain prior approval of MOTIR pursuant to the FIPA. If the acquirer intends to acquire a controlling interest over the management of defence companies by means of a purchase or exchanges of shares, mergers or business transfers, such acquirer must obtain prior approval of MOTIR pursuant to the Defence Acquisition Programme Act.

FIPA provides that foreign investment may be restricted where a foreign investor effectively acquires managerial control of an enterprise and such acquisition is likely to: (i) impede the production of defence industry materials; (ii) involve goods or technologies subject to export authorisation that are highly likely to be diverted for military purposes; (iii) result in the disclosure of information treated as a state secret; (iv) seriously and materially undermine the maintenance of international peace and security; or (v) lead to a significant risk of leakage of National Core Technologies (NCT) or National High-Tech Strategic Technologies (NHST).

MOTIR determines whether any of the foregoing grounds for restriction are met through a national security review, which may be initiated either upon a filing by the foreign investor or ex officio. Where, as a result of such review, MOTIR determines that the transaction would adversely impact national security, it may prohibit the transaction, in which case the transaction must be suspended. If the transaction has already been completed, the shares or equity interests transferred pursuant to such transaction must be transferred within six months (extendable by up to one year) to a Korean national or to a foreign investor that does not pose national security concerns.

The Industrial Technology Protection Act (ITPA) provides for a national security review of foreign investments related to NCT. According to the ITPA, foreign investors are required to obtain prior approval of MOTIR to obtain control, by way of acquisition, merger, joint venture or other types of investments, of Korean entities holding NCT developed with government R&D subsidies. In addition, foreign investors are required to report in advance to MOTIR to obtain control of entities which hold NCT developed without government R&D subsidies. Similarly, the Special Measures Act on Strengthening and Protecting the Competitiveness of the National High-Tech Strategic Industry provides for a prior approval regime by MOTIR for foreign investment in companies holding NHST. Where prior approval is obtained following review by MOTIR, the aforementioned national security review may be exempted.

Introduction of Electronic Shareholders’ Meeting System for Listed Companies

On 22 July 2025, a partial amendment to the Korean Commercial Code was promulgated, and the amended provisions concerning the introduction of electronic shareholders’ meetings for listed companies are scheduled to take effect on 1 January 2027. Under the amended Commercial Code, a listed company may hold an electronic shareholders’ meeting in parallel with an in-person meeting at the place of convocation, and certain listed companies prescribed by Presidential Decree meeting certain criteria such as total assets will be required to hold shareholders’ meetings electronically. This amendment is expected to serve as a catalyst for expanding the exercise of shareholder rights by facilitating greater participation of minority shareholders in shareholders’ meetings of listed companies. In addition, adequate preparation of technical measures – such as the establishment of relevant IT infrastructure – will be essential for the successful implementation of electronic shareholders’ meetings. See the South Korea Trends and Developments article in this guide for further details.

Appointment and Expansion of Mandatory Ratio of Independent Directors in Listed Companies

On 22 July 2025, a partial amendment to the Korean Commercial Code was promulgated, and the amended provisions concerning the appointment of independent directors and the expansion of the mandatory appointment ratio for listed companies are scheduled to take effect on 23 July 2026. Under the amended Commercial Code, an independent director is defined as an outside director who is independent from inside directors, executive officers, and persons directing the execution of business. Listed companies will be required to appoint independent directors rather than outside directors that do not meet such independence criteria, and the mandatory appointment ratio will be increased from at least one-fourth of the total number of directors to at least one-third (provided that companies with total assets of KRW2 trillion or more as of the end of the immediately preceding fiscal year continue to appoint independent directors constituting a majority of the board, as under the current regime). Compliance with the revised mandatory ratio will be required by 22 July 2027. It remains to be seen whether this amendment will amount merely to a change in terminology or will substantively strengthen the role of independent directors. Further academic and practical discussions, as well as the establishment of judicial precedents, would be necessary to clarify the specific meaning of independent directors and the criteria for assessing their independence. See the South Korea Trends and Developments article in this guide for further details.

Strengthening of Treasury Share Disclosure Requirements for Listed Companies

Amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act, principally aimed at strengthening treasury share disclosure requirements for listed companies, took effect on 30 December 2025. The key features of these amendments include: (i) expansion of the scope and frequency of required disclosures; (ii) the addition of a comparison between treasury share disposition plans and actual implementation status; and (iii) enhanced sanctions for violations of treasury share disclosure obligations. As listed companies will be required to reflect these amended provisions beginning with their annual reports and other periodic filings to be submitted in 2026, prompt preparation and compliance measures will be necessary. See the South Korea Trends and Developments article in this guide for further details.

Introduction of the Yellow Envelope Act

On 9 September 2025, an amendment to the Trade Union and Labor Relations Adjustment Act (commonly referred to as the Yellow Envelope Act) was promulgated and is scheduled to take effect on 10 March 2026. Under the amended law: (i) the definition of “employer” is expanded to include any person who substantively governs or determines the working conditions of workers other than its directly employed employees, thereby allowing labour unions composed of indirectly employed workers or workers without a direct contractual employment relationship to demand collective bargaining with the principal contractor, parent company, or similar entity where such criteria are satisfied; (ii) the scope of activities that are subject to labour dispute actions (eg, labour strike, walkout, picketing) is broadened to include managerial decisions affecting working conditions and material breaches of collective agreements; and (iii) an employer’s claims for damages against a labour union arising from labour dispute action are restricted. Accordingly, enhanced communication through labour unions or labour-management councils will be required in connection with material managerial decisions, particularly workforce reductions, restructuring, and corporate transactions such as mergers, acquisitions, or spin-offs. See the South Korea Trends and Developments article in this guide for further details.

Restriction on Voting Rights of Shareholder-Directors in Resolutions Approving the Ceiling on Directors’ Remuneration

On 24 April 2025, the Korean Supreme Court held that a person who is both a director and a shareholder of a company constitutes a specially interested party with respect to a shareholders’ resolution approving the ceiling on directors’ remuneration and therefore is restricted from exercising voting rights on such agenda. Accordingly, the Supreme Court determined that the relevant shareholders’ resolution was unlawful and should be revoked. See the South Korea Trends and Developments article in this guide for further details.

Transfer of Shares in a Subsidiary Conducting Core Business Operations

On 16 October 2025, the Korean Supreme Court held that the transfer of shares in a subsidiary conducting core business operations constitutes a material transfer of business and therefore requires a special resolution of the shareholders’ meeting, which must be approved by at least two-thirds of the voting rights of the shareholders present and at least one-third of the total issued and outstanding shares. See the South Korea Trends and Developments article in this guide for further details.

Expansion of the Scope of Directors’ Duty of Loyalty

On 22 July 2025, a partial amendment to the Korean Commercial Code expanding the scope of directors’ duty of loyalty came into effect. The amended Commercial Code adds shareholders – alongside the company – as beneficiaries of the duty of loyalty and provides that, in performing their duties, directors must protect the interests of all shareholders and treat the interests of the entire body of shareholders fairly and equitably. With the directors’ duty of loyalty to shareholders now expressly codified, debate may arise as to whether, and to what extent, directors may bear direct liability for damages to shareholders in connection with the performance of their duties for the company. In addition, in transactions involving corporate reorganisations – such as mergers or spin-offs – or other situations giving rise to conflicts of interest among shareholders, it will be necessary to undertake more rigorous review from the perspective of shareholder interest protection and to consider establishing relevant internal control standards and procedures. While, in principle, the interests of the company generally align with those of its shareholders, and it may be argued that a director’s duty of care and loyalty as a fiduciary of the company already encompasses the protection of the interests of all shareholders, practical changes may nonetheless be required in decision-making relating to corporate reorganisations or capital transactions where concerns have historically been raised regarding the infringement of proportional shareholder interests. Examples include the listing of a spun-off subsidiary following a physical division, allegations of unfair merger ratios, capital increases or treasury share disposals in favour of specific parties, and squeeze-out transactions affecting minority shareholders. Accordingly, companies will need to conduct more stringent review and scrutiny of transactions that may give rise to conflicts of interest among shareholders. In particular, companies – especially listed companies with heightened exposure to challenges from minority shareholders – may need to establish proactive measures, including the implementation of additional internal control standards and procedures designed to ensure fair and equitable treatment of the interests of all shareholders.

Voting Rights Cap in the Appointment and Removal of Audit Committee Members

On 22 July 2025, an amendment concerning the 3% voting rights limitation applicable to the appointment and removal of audit committee members of listed companies with total assets of KRW2 trillion or more was promulgated and is scheduled to take effect on 23 July 2026. Under the previous regulatory regime, where a shareholder holding more than 3% of the shares was the largest shareholder, the voting rights attached to shares exceeding 3% – calculated by aggregating the holdings of its specially related parties – could not be exercised in the appointment or removal of an audit committee member who was not an outside director. The amended law expands the application of the 3% cap by providing that, regardless of whether the audit committee member is an outside director, the voting rights attached to shares exceeding 3% – again calculated on an aggregated basis with the largest shareholder’s specially related parties – may not be exercised in any appointment or removal of audit committee members.

Mandatory Adoption of Cumulative Voting and Expansion of Separately Elected Audit Committee Members

The amended Korean Commercial Code, promulgated on 9 September 2025 and scheduled to take effect on 10 September 2026, mandates the adoption of a cumulative voting scheme for listed companies with total assets of KRW2 trillion or more and increases the number of audit committee members to be elected separately from other directors from one to two. As a result, the likelihood of appointing directors and audit committee members capable of representing the interests of minority shareholders is expected to increase, thereby enhancing the protection of minority shareholder rights. At the same time, however, there is a possibility that threats to management control and governance stability may also rise, including potential disputes or conflicts between controlling and minority shareholders with a significant level of shareholding, increased attempts by hedge funds or activist investors to gain board representation, and a higher incidence of hostile takeover attempts.

Mandatory Cancellation of Treasury Shares

As of February 2026, the introduction of an amendment to the Korean Commercial Code which would primarily provide for the mandatory cancellation of treasury shares, is under consideration. The proposed amendment would require a company to cancel treasury shares held by it, except for certain grounds specified in its articles of incorporation; prohibit the allotment of new shares to treasury shares; and require the mutatis mutandis application of provisions governing the issuance of new shares to the disposal of treasury shares, thereby restricting the utilisation of treasury shares. Accordingly, the use of treasury shares as a means of maintaining control over a company is expected to face limitations, and companies will need to comprehensively review their treasury share cancellation and disposal plans. See the South Korea Trends and Developments article in this guide for further details.

In the case of acquiring a Korean-listed company in a friendly transaction, if there is a controlling shareholder in the company, the purchaser normally acquires the shares of the controlling shareholder first and then, if needed, acquires the remaining shares of the minority shareholders through a tender offer, to go private thereafter.

In the case of a hostile takeover of a Korean listed company, the bidder usually acquires less than 5% of the target company’s shares in order to avoid filing the 5% Disclosure Report; see 4.2 Material Shareholding Disclosure Threshold. A failure to fulfil the requirement to file a 5% Disclosure Report will result in restrictions on voting rights and the FSC may order the disposal of such shares held in violation.

Conversely, in some cases a mandatory tender offer may be required; see 6.2 Mandatory Offer Threshold.

The FISCMA provides that if an investor (which includes specially related persons and parties acting in concert) intends to hold 5% or more of the voting shares or other equity securities issued by a listed company, such investor must file a report with respect to the contemplated shareholding with the FSC and the Korea Exchange (KRX) within five business days of both the execution date of the relevant share purchase agreement (SPA), as well as the closing date of the transaction contemplated thereby (the “5% Disclosure Report”). In the case of any change of 1% or more in the shareholding of an investor, an update report must be filed with the FSC and KRX within five business days of such change. When filing the 5% Disclosure Report, the investor must indicate whether its investment in the company demonstrates a passive portfolio investment or an intention to exert influence over the management of the company.

If the shareholding of the investor reaches 10% or more of the issued and outstanding voting shares of the listed company or the investor otherwise gains the authority to influence the management of the company by, for example, the election of the majority of the board of directors of the company, a report must be filed with the Securities and Futures Commission (SFC), a subcommittee of the FSC, and KRX within five business days of the relevant event that has triggered the reporting obligation (the “10% Disclosure Report”). Thereafter, any additional change in the shareholding of the investor in the company must be reported to the SFC within five business days of such change.

Both the 5% Disclosure Report and the 10% Disclosure Report must be publicly disclosed and therefore a bidder’s stakebuilding is significantly affected by such disclosure (in particular, the 5% Disclosure Report) since the purchase price of the shares as well as the purpose for which the purchase of the shares is made is disclosed to the public.

A company is prohibited from implementing any higher or lower reporting thresholds, either in its articles of incorporation, by-laws, or by way of any other means, that would change the rules triggering the filing of the 5% Disclosure Report or the 10% Disclosure Report.

Further, mandatory tender offer obligations (see 6.2 Mandatory Offer Threshold) will also likely negatively impact a bidder’s stakebuilding strategy.

Defence mechanisms to stakebuilding activities in the context of hostile takeovers such as poison pills, golden shares and golden parachutes, which are sometimes found in other jurisdictions, are not permissible under Korean law.

Dealing in derivatives is permitted subject to certain filing/reporting obligations. See 4.5 Filing/Reporting Obligations.

Derivative transactions are subject to certain reporting obligations and approval requirements under the foreign exchange regulations. Further, derivatives with listed shares as the underlying assets are generally subject to public disclosure obligations if the purchaser of such derivatives is entitled to acquire title to the listed shares. Under the MFRTA, relevant merger filing requirements are only triggered when the purchaser actually acquires the shares by exercising rights attached to the derivatives.

Shareholders of listed shares must make known the purpose of their acquisition in the 5% Disclosure Report. See 4.2 Material Shareholding Disclosure Threshold.

In share purchase transactions, the target company is generally not a party to the transaction and thus is not required to disclose the deal. However, if the largest shareholder of a listed company changes, or a share purchase transaction which involves a change in the largest shareholder is executed, such fact must be disclosed. However, the seller may be subject to public disclosure requirements, particularly if it is a public company. In the case of business transfers or mergers where the target company is a party to the transaction, such target company may be subject to public disclosure requirements. In such case, disclosure is required at the time of approval of the transaction by the board of directors, which normally lands on or around the execution date of the transaction documents.

In the context of a tender offer, it should be noted that in Korea, a target company and its board are not active participants in the tender offer process. Further, as described in 4.3 Hurdles to Stakebuilding, defence mechanisms such as poison pills and golden parachutes are not permissible under Korean law. Therefore, a prospective acquirer generally does not seek an endorsement of its tender offer bid from the board of directors of the target company.

Although parties may choose to make a voluntary disclosure earlier than as required under the laws, in the vast majority of cases, disclosure is only made at the time when it is required under the relevant laws. On rare occasions, parties decide to make voluntary disclosures in order to respond to media reports or to co-ordinate the timing of disclosures to be made at multiple stock exchanges.

The scope of due diligence conducted in Korea is generally on par with other international jurisdictions when it comes to key aspects. The scope of due diligence is determined on a case-by-case basis depending on the particular needs of the relevant parties, the nature of the proposed transaction and the characteristics of the target company. Common areas of due diligence involve legal, tax, business and accounting issues. Environmental, HR and technology, including IT separation, issues may also be covered.

Legal due diligence generally covers such areas as general corporate, permits and licences, compliance with regulations, contracts, assets, intellectual property, insurance, litigation, HR, fair trade and personal information. In-person interviews have generally been replaced with virtual interviews and physical data rooms with virtual data rooms post-COVID-19, although this has not particularly limited the scope of the due diligence conducted.

If a listed company is involved, standstill provisions or agreements are usually requested at an early stage of the deal process if they are negotiated between the parties.

Exclusivity provisions are also requested on a case-by-case basis by potential investors. However, significant M&A transactions are frequently structured as auction deals where the seller does not accept such exclusivity provision or only accepts such provision once the bidder has been selected as the preferred bidder and only for a short period of time.

It is permissible and common for tender offer terms and conditions to be documented in a definitive agreement between the offeror and controlling shareholders of the public target company prior to launching a tender offer to public shareholders. The target company is generally not a party to such an agreement. The procedure would usually involve the following two steps: completing a purchase from controlling shareholders and conducting a tender offer to purchase shares from public and minority shareholders.

Whilst the precise length of a particular transaction may differ depending on the circumstances, the duration of M&A transactions is generally similar to that observed in many other jurisdictions. In general, due diligence takes around four to six weeks; following this, negotiation, finalising the transaction documents, the internal approval process and execution take around one to two months.

Execution to completion usually takes two to three months, which can vary largely depending on how long regulatory approvals, especially business combination reports, take. For transactions that could be deemed to restrain competition or those requiring merger filings in multiple jurisdictions, it may take significantly longer to close the transaction.

However, for M&A transactions in which a special resolution of a general meeting of shareholders is required, such as the merger of a listed company or a transfer of all or an important part of the company’s business, a minimum of two and a half months may additionally be needed. This is because it takes at least one and a half months to convene a general meeting of a listed company, plus about one month for mandatory procedures, such as the creditor protection procedure, as required under the KCC.

If the shares of a listed company are to be acquired from ten or more persons outside the KRX by an investor within a six-month period and the total shareholding ratio of such investor (including specially related persons and other parties acting in concert) reaches or exceeds 5%, a tender offer must be made. There is no special requirement for unlisted companies.

Cash is more commonly used as consideration in comparison to shares. Shares are often used as consideration in the case of internal reorganisation; for example, a merger or comprehensive share exchange with an affiliated company.

In order to bridge value gaps between parties, deals with high valuation uncertainty often adopt:

• a purchase price adjustment mechanism whereby the purchase price is adjusted at or after the closing of the transaction to reflect changes in working capital or net assets;
• an earn-out method in which partial payment of the purchase price is made at closing and the remaining amount is paid in accordance with business performance levels for a certain period after closing; or
• a locked-box mechanism where unpermitted leakage which occurs after a certain valuation date can be claimed for as damages.

A person who intends to conduct a tender offer must disclose the following information:

• details of the tender offeror and related parties thereof;
• the tender offer agent;
• the issuer of the shares subject to the tender offer;
• method of tender offer;
• purpose of tender offer;
• if there are any agreements for purchase of the shares prior to the tender offer and if so, the terms thereof;
• the type and number of shares subject to the tender offer;
• terms of the tender offer including the tender offer period, price and settlement date;
• future plans of the company for which the tender offer is being conducted; and
• the location at which the tender offer statement and the tender offer prospectus can be accessed.

As a general principle, the tender offeror must, without delay, purchase all shares tendered during the tender offer period in accordance with the terms and conditions of the tender offer that are set forth in the tender offer statement. However, the tender offeror does not need to acquire all tendered shares if the tender offer public notice and the tender offer statement indicate that:

• none of the tendered shares will be acquired if such shares fall below the number being sought; or
• when more shares are tendered than what is sought, the tender offeror will purchase from the tendered shares on a pro rata basis and not purchase any of the remaining shares.

When a tender offer is launched by a bidder to obtain a controlling stake in a public company, the below control thresholds are considered, and minimum acceptance conditions are often included in the tender offer statement.

In respect of control thresholds:

• if a shareholder owns at least 30% of the shares of a listed company, such shareholder is generally recognised to have control;
• an ordinary resolution is adopted at a general meeting of shareholders by an affirmative vote (whether in person or by proxy) of a majority of the voting shares represented at such meeting, which vote shall also account for at least one-fourth of the total issued and outstanding voting shares of the company; and
• a special resolution is adopted by an affirmative vote (whether in person or by proxy) of at least two-thirds of the voting shares represented at such meeting, which vote shall also account for at least one-third of the total issued and outstanding voting shares of the company.

If mandatory tender offers are introduced, the purchaser will be required to make a tender offer to acquire at least 50% + 1 share of the total issued shares of the target company less the number of shares the purchaser has acquired from the seller in the transaction in which the control of the target is changed, at the same price as the price of the shares at which the purchaser acquired them from the seller.

Although it is possible to make private deals conditional on the procurement of financing by the bidder, it is very rare to find “financing-out” condition precedents in Korean M&A transactions.

In the case of tender offers, making the tender offer conditional on the successful financing by the bidder is not permitted in Korea.

In private deals, the parties can agree on break-up fees, reverse break-up fees or any other similar arrangements. In Korean M&A transactions, it is quite common for the purchaser to pay a deposit (usually 10% of the purchase price) at the time of signing. If such deposit is paid, and if the deal is terminated due to reasons attributable to the purchaser, the deposit vests in the seller.

As a counter to such scheme, it is also quite often the case that the purchaser requests that the seller pays double the deposit if the deal is terminated due to reasons attributable to the seller. That is, the deposit will function as a break-up fee and a reverse break-up fee.

There have been several cases that specifically exclude COVID-19 and similar infectious diseases or pandemics from the definition of a Material Adverse Effect (MAE). As occurrence of MAE is generally agreed to give rise to a termination right, such exclusion would mean higher deal certainty even if negative impacts on the target company were to occur due to COVID-19 and similar infectious diseases or pandemics.

The bidder may execute a shareholders’ agreement with the other shareholders for additional governance rights such as the right to appoint directors or the statutory auditor with respect to the target where it does not seek to obtain full ownership of the target. Furthermore, the articles of incorporation of a target may be amended to provide for additional governance rights to the bidder.

For example, certain matters may be set forth in the articles of incorporation to require a special resolution at the shareholders’ meeting and/or board meeting, which can secure veto rights for certain corporate actions by requiring an increased number of affirmative votes from the shareholders and directors. In any event, such execution of the shareholders’ agreement and amendment of the articles of incorporation must not violate the KCC’s mandatory rules regarding corporate governance.

Shareholders may vote by proxy by having a third party submit a proxy at the shareholders’ meeting.

In the case of listed companies, in order to make a solicitation of voting by proxy, one must follow the procedures set forth in the FISCMA. For example, a solicitor must provide a proxy form and reference documents to the one being solicited in a certain way and submit the documents to the FSC and KRX no later than two business days prior to the date of delivery, and the documents should be kept in a certain place where they are accessible to the general public.

Squeeze-out of minority shareholders at fair value is possible in Korea. However, a squeeze-out is only permissible if the major shareholder owns at least 95% of the outstanding shares (the number of shares held by subsidiaries is aggregated) and complies with certain procedures. Whilst the squeeze-out mechanism was used for some time at the early stage of its introduction in 2012, it has not been frequently used thereafter.

As a method of purchasing the remaining shares that are not tendered in the tender offer, many companies take alternative approaches such as a comprehensive share exchange, a capital reduction or a stock consolidation. In the case of a comprehensive share exchange, when a special resolution of the shareholders is passed for each of the parent company and the subsidiary, the parent company receives all of the subsidiary’s stocks from the shareholders of the subsidiary and the parent company’s shares are granted to the shareholders of the subsidiary in exchange. Here, it is allowable to give cash in lieu of the parent company’s shares, in which case, the minority shareholders of the subsidiary will be naturally cashed out. Capital reduction or stock consolidation is a method of cash-out by making shares of minority shareholders fractional shares by setting the merger or the capital reduction ratio high.

In Korea, the target company is generally not involved in the tender offer process and, therefore, it is not common to obtain irrevocable commitments to tender or vote by controlling shareholders of the target company. However, it should be noted that there have been some cases in which irrevocable commitments to tender by controlling shareholders have been obtained through privately negotiated definitive agreements.

Prior to launching a tender offer, the bidder makes various preparations for the tender offer, such as selecting the tender offer agent, drafting the tender offer statement, prior consultation with the FSS, reserving space in newspapers, depositing the tender offer funds and procuring a certificate of deposit from the bank. Once such preparations have been completed, the bidder launches a tender offer whereby public notice of the tender offer is made. Public notice must be made in two or more newspapers and the bidder must also file a tender offer statement and prospectus with the FSC and the KRX, and send a copy of the tender offer statement to the issuer of the target shares.

In principle, if a target company issues new shares and solicits offers from 50 or more persons (excluding professional investors and certain other excluded parties) to acquire new shares and the total value of shares issued is KRW1 billion or more, the target company must file a registration statement and prospectus with the FSC. The registration statement and prospectus must also be publicly disclosed. Additionally, if a listed company issues new shares, it must submit board resolutions approving the issuance to the FSC and the KRX. Furthermore, if a company issues new shares to a specific investor without complying with the pre-emptive rights of the existing shareholders, the company is required to publish a public notice or give individual notices to the existing shareholders in advance.

In the context of the issuance of new shares in a business combination such as a merger, rather than a new share issuance for general capital increase, if the target/issuing company is a listed company, several types of disclosures must be made in stages over the course of several months. First, the target company must disclose the board resolution for the business combination or the execution of the contract, whichever comes first. Further, the acquirer, who acquires more than 5% of the shares of the target company through the relevant business combination, has to file a 5% Disclosure Report at the time of contract execution.

If a business combination results in the issuance of new shares of a listed company (unless it is issued to a limited number of persons and all of them deposit the shares in the Korean Securities Depository for a one-year period), the target company must disclose the registration statement and prospectus. Such a registration statement will be accepted by the FSC and will take effect after a certain period. After the effective date, the shareholders’ meeting will be held to approve the business combinations, such as a merger. All convenings and results of the general meeting of shareholders must be disclosed, and after the issuance is made, the result of the business combination and the issuance of share results must be disclosed, and a 5% Disclosure Report and a 10% Disclosure Report (if 10% or more is acquired) must be made.

The financial statements of the corporate bidder must be included in the tender offer statement. The financial information of the target company for the quarter immediately preceding the tender offer, as well as those of the past three years, must also be included.

There is no statutory requirement related to the tender offer that the bidder’s financial statements be subject to generally accepted accounting principles, International Financial Reporting Standards or any other accounting standards at the time of the tender offer. However, if the bidder is a listed company in Korea, there is a general obligation to prepare the financial statements according to K-IFRS standards. With respect to financial information of the target company, all companies listed on the KRX (either KOSPI or KOSDAQ) are required to prepare financial statements in accordance with K-IFRS.

In the case of a merger, the merger agreement, the merger ratio estimation report and the company’s latest balance sheet and income statement must be made available for a shareholder or creditor’s review at the principal office of the constituent companies two weeks prior to the shareholders’ meeting for the merger approval.

Furthermore, there are also circumstances in which transaction documents such as the SPA, business transfer agreement (or asset purchase agreement) or merger agreement are required to be disclosed to the public. Specifically, those companies (including publicly listed companies) subject to disclosure obligations of their annual report must submit a material fact report which describes the major terms of the contemplated transaction to the FSS upon their decision to enter into a transaction to acquire businesses or assets (including shares) in which the purchase price of the transaction or book value of the assets (as of the most recent fiscal year-end) is not less than 10% of the total assets of the company, or upon their decision to enter into a merger agreement.

The material fact report should include a copy of the relevant transaction documents such as the SPA, business transfer agreement (or asset purchase agreement) or merger agreement. In the past, the FSS has not actively enforced obligations to submit transaction documents in the material fact report, and the submitted transaction documents, if any, have not been disclosed to the public. However, from 29 April 2019, following a system change of the FSS, material fact reports are accepted only if the relevant transaction documents are also submitted and disclosed to the public (provided that confidential and sensitive information such as classified military information, personal information, NCT and trade secrets may be redacted). 

In addition to the above, transaction documents may also be required to be submitted as part of the filings to regulators, such as the KFTC, the KRX or the Bank of Korea.

Under the current Korean Commercial Code, directors owe fiduciary duties (that is, duty of care and loyalty) to the company. It is a well-established principle in Korea (and recognised by the Korean courts) that a director owes a fiduciary duty to the company and not to the shareholders of the company even if the company is wholly owned by a single shareholder on the grounds that the shareholders and the company are separate legal persons.

However, the recent amendment to the Korean Commercial Code added shareholders as beneficiaries of directors’ duty of loyalty. This change was introduced in recognition of the limitations of the prior statutory framework – which required directors to faithfully perform their duties for the benefit of the company – in adequately protecting shareholders in situations where no damage is incurred by the company but losses are suffered by all shareholders, or where certain shareholders benefit while others suffer losses. Although judicial precedents interpreting the amended provision are not yet well-established, it would be necessary to pay close attention as the current interpretations regarding directors’ duties may evolve following the amendment (see 3.2 Significant Changes to Takeover Law).

Because a target company is usually not involved in the takeover bid process, it is not common for boards of directors to establish special or ad hoc committees in business combinations in Korea. Even in business combinations where the target company is a party, such committees are rarely established in practice.

Under the KCC, any director who has a special interest in a matter for board resolution is prohibited from voting on such resolution. This is to avoid a conflict-of-interest situation between the company and such director. Therefore, in the context of business combinations, whether or not a particular director is subject to limited voting rights is subject to a case-by-case analysis.

Although there is no Korean statute that has specifically adopted the concept of “business judgement rule” as it applies in the USA, Korean courts recognise a similar principle. According to court precedents, a director is deemed to have discharged their duty of care even if such decision results in loss or damage to the company, when the relevant director has:

• sufficiently collected, investigated and examined the necessary and appropriate information to the extent reasonably available;
• reasonably believed that such decision is in the best interests of the company; and
• reached such decision in good faith following due process, unless the decision-making process or the content of such decision is not significantly unreasonable.

The above principle is also applicable in takeover situations, although it should be noted that the board of directors of the target company generally does not play a significant role in takeover transactions in Korea.

In Korea, the board of directors seeks independent third-party advice with respect to takeover bids only in special circumstances. Such circumstances often arise in the case of a merger or a comprehensive share exchange transaction in which the company is a party and therefore the board is responsible for determining the fair merger or exchange ratio. These third-party opinions may be helpful to mitigate the risk of the board being found to have breached its fiduciary duties. According to the FISCMA, if a listed company engages in business combinations such as a merger or a comprehensive share exchange and does not set its valuation at market price, it is obliged to be evaluated by a third-party valuation agency.

Directors are deemed to be fiduciaries of the company and owe a duty of care and loyalty to the company, and officers are also under a similar duty of care depending on their responsibilities. While Korean law does not specifically impose any duties on a controlling shareholder in relation to a business combination, a controlling shareholder may be found to be a de facto director and thereby owe fiduciary duties to the company if such controlling shareholder exercises control over the decisions made by a director.

In addition, the KCC restricts direct and indirect self-dealing, prohibits usurpation of corporate opportunities, and prevents interested directors from voting, so as to address potential conflict of interest issues.

Hostile tender offers are permitted in Korea but they are not common; in rare cases where they have been attempted, such attempts have most often failed. Recently, shareholder activism has become more prominent in M&A transactions.

A noteworthy case in the Korean M&A market in 2024/2025 is the dispute over the management rights of Korea Zinc. MBK Partners, together with Young Poong, the largest shareholder of Korea Zinc, declared a public offering of Korea Zinc’s shares, and the dispute arose when the chairman of Korea Zinc responded by publicly offering its own shares. On 28 March 2025, Chairman Choi Yoon-bum successfully defended his management rights through an annual general meeting of shareholders.

A director is allowed to take defensive measures against a hostile takeover so long as the director satisfies their fiduciary duty to the company and complies with the relevant laws and regulations. However, the scope of such measures may be limited in this context because, following the recent amendment to the Commercial Code, a director owes its fiduciary duties to the company and all shareholders, not to certain shareholders.

Common defensive measures that directors of a target company may take against a hostile takeover can be categorised into proactive and reactive measures.

Proactive measures include adoption of defensive strategies such as staggered board elections, limits on the number of directors, acquisition of treasury shares and requiring supermajority shareholder approval. Reactive measures include third-party allotment of new shares, third-party allotment of convertible bonds and bonds with warrants, disposition of treasury shares and public offering of new shares. The directors of the target company must comply with relevant laws and regulations and satisfy their fiduciary duties when adopting such defensive measures.

Defensive measures such as the use of poison pills, multiple voting shares or golden shares are not permissible defensive measures under Korean law.

When adopting defensive measures, directors must comply with the relevant laws and regulations, the company’s articles of incorporation, as well as satisfy their fiduciary duties owed to the company and all shareholders. Any breach of the rules and/or their duties would subject the director to civil liability and/or criminal sanctions if such breach causes losses or damages to the company.

With respect to defensive measure enactments, whether or not issuing new shares or convertible bonds or selling treasury shares to non-hostile parties in the context of a hostile takeover infringes upon the pre-emptive rights of existing shareholders and is therefore illegal has been the subject of constant debate. If the issuance lacks a valid business reason and therefore it is clear that the main purpose of issuing new shares to a third party is to maintain the current controlling shareholder’s control over a company, the issuance may be found to infringe on the pre-emptive rights of the existing shareholders in violation of the KCC.

The board of the target company is allowed, but not required, to express its opinion on a tender offer. If the transaction involves the issuance of new shares or a merger to which the target company is a party, such transaction cannot be implemented without board approval.

Both civil and criminal litigations are common in hostile takeover situations, although it should be noted that hostile takeover situations are quite rare in Korea. Litigation (including injunctive relief proceedings) is usually a part of the hostile takeover process. In other non-hostile transactions, minority shareholders rarely bring claims or initiate lawsuits. However, in recent years, minority shareholders have increasingly complained about merger ratios or share exchange ratios in the case of mergers involving listed companies or comprehensive share exchanges. Furthermore, lawsuits have occasionally arisen in private M&A deals in connection with the return of deposits or breach of representations and warranties.

In the case of a hostile takeover, a lawsuit is often brought at the very first stage of determining the intention of the hostile company and the ownership of the shares of the company. It is often the case that the hostile company engages in litigation at the start of the process to grasp the scope or size of the problems of existing management by requesting access to the book of accounts.

In friendly deals, the deposit will often be asked to be returned if the deal is terminated midway and compensation for damages will be claimed in the case of a breach of representations and warranties. However, in such cases, it is more common for the parties to come to a settlement. In the case of high-profile corporate reorganisations, injunctions contesting the unfair merger or share exchange ratio are generally brought by minority or activist shareholders during the period between the first public notice of the deal and the date of the general shareholders’ meeting.

In Korea, as in other jurisdictions, deals can frequently fall through for a variety of reasons. There is no general rule of law or established case law on how such cases should be handled under Korean law. While such broken deals do not necessarily lead to a dispute, one of the few noteworthy broken-deal disputes is a dispute between HDC Hyundai Development Company (HDC) and Asiana Airlines. In late 2019, HDC Hyundai Industrial Development Company announced its intention to acquire Asiana Airlines with an earnest money deposit of KRW250 billion, but the deal fell through in September 2020. In November 2020, Asiana Airlines initiated litigation against HDC, requesting an order mandating issuance of a notice of termination of pledge to permit withdrawal of the deposit previously received, and seeking damages. A court ruling was made in 2022 that Asiana Airlines was not obligated to return the earnest money deposit. In March 2025, the Supreme Court dismissed the appeal, thereby finally affirming judgment in favour of Asiana Airlines.

Conventionally, shareholder activism has not been active in Korea, but it is showing signs of becoming more active recently. In 2015, Elliott Management engaged in shareholder activism against the merger of Samsung C&T and Cheil Industries. In 2018, KCGI, the domestic activist fund, became the second-largest shareholder by acquiring Hanjin Kal, the largest shareholder of Korean Air, and Hanjin, its subsidiary, to improve the corporate governance structure, establish a shareholders’ council composed of the majority shareholders and general shareholders, sell off insolvent business, improve management efficiency and strengthen risk management. Other than KCGI, multiple activist funds have been founded since 2018 and have tried to influence the management of companies by various means, such as delivering public letters and pro-actively exercising shareholder rights including voting rights in shareholders’ meetings.

In 2022, companies such as SM Entertainment and Osstem Implant have recently been targeted by activist funds, leading to disputes over the management control of such companies.

Notably, activist interventions at SM Entertainment yielded some success, including a change in the composition of the board of directors (see 11.2 Aims of Activists).

The number of domestic companies targeted by activist funds was 66 in 2024 and 77 in 2023. This is a significant increase from 10 in 2020 and 27 in 2021. With the emergence of platforms capable of mobilising minority shareholders and the multiple amendments to the Korean Commercial Code in 2025 which aimed to strengthen the shareholder rights, the number of companies becoming targets of shareholder activism is expected to increase even more.

Requests made by activist funds include demands to increase dividends, improve corporate governance, conduct share revaluation and dispose of non-core businesses or assets. Lately, ESG has been an important factor in corporate evaluation in Korea, and we expect shareholder activism related to corporate governance to increase.

The National Pension Service, which owns a large number of shares (but typically less than 10%) in a number of domestic listed companies, is also actively exercising shareholder rights by introducing a stewardship code in July 2018. Other institutional investors, including pension funds, asset management firms, securities companies and PEFs, have also adopted stewardship codes. As of December 2025, a total of 249 institutions were found to have implemented stewardship codes. This is a significant increase from the 137 in 2020 and 181 in 2021.

A representative example of a company that recently became a target of shareholder activism is SM Entertainment. Align Partners, a local activist fund, raised issues about the unfairness of a contract between SM Entertainment and a company owned by Soo-Man Lee, the founder and the former largest shareholder. Align Partners went on further to submit a shareholder proposal and filed a shareholder derivative lawsuit. As a result, the then-current management withdrew its support for Soo-Man Lee. In support of Soo-Man Lee, HYBE, one of the largest entertainment companies in Korea, purchased 18.5% of SM Entertainment’s shares from Soo-Man Lee and launched a tender offer to acquire additional shares in SM Entertainment. After the announcement of the tender offer by HYBE, Kakao Entertainment, another large entertainment company, announced that they would interlope and launch a competing tender offer at a higher price to gain control of SM Entertainment, which was supported by Align Partners. This dispute to control the management of SM Entertainment and the series of competing tender offers attracted a great deal of public and media attention, as the ultimate acquirer of SM Entertainment would likely have a significant impact on the entertainment industry’s future. On 12 March 2023, HYBE announced that it would renounce its tender offer to acquire control of the management of SM Entertainment, bringing the dispute between the two entertainment giants to a close.

In 2025, a notable dispute arose between Taekwang Industrial and Truston Asset Management concerning the issuance of exchangeable bonds. Truston Asset Management had actively engaged as a major shareholder of Taekwang Industrial since 2021. On 27 June 2025, Taekwang Industrial disclosed a plan to issue exchangeable bonds exchangeable into all treasury shares held by the company. Truston Asset Management filed applications for a preliminary injunction to suspend directors’ unlawful acts and to prohibit the issuance of the exchangeable bonds, arguing that the exercise of exchange rights over treasury shares amounting to 24.41% could undermine shareholder value; however, the applications were dismissed. Subsequently, on 24 November 2025, Taekwang Industrial withdrew the plan to issue exchangeable bond, citing share price volatility, government policy direction, and protection of shareholder value.

Similarly, Pharmaresearch withdrew its plan for a spin-off and a transition to a holding company structure following pressure from Must Asset Management, which issued public letters objecting to such plan to other shareholders. On 13 June 2025, Pharmaresearch had disclosed a plan involving a vertical spin-off separating its core business and a transition to a holding company through an in-kind contribution. Must Asset Management strongly criticised the plan as a measure to reinforce the controlling shareholder’s control over the company. Ultimately, on 8 July 2025, Pharmaresearch withdrew the spin-off plan.

In addition, Align Partners submitted shareholder proposals to Coway seeking the adoption of a cumulative voting scheme and the appointment of outside directors, and issued letters to other shareholders advocating enhanced shareholder returns and greater board independence. At the annual general meetings of DI Dongil Corporation and Oscotec, amendments to the articles of incorporation proposed by minority shareholders were approved, illustrating that a wide range of companies have now become the targets of shareholder activism in Korea.

There have been several cases where activists have sought to interfere with the completion of announced transactions in Korea. In 2015, Elliott opposed the merger of Samsung C&T and Cheil Industries as shareholders of Samsung C&T. At the time, Elliott claimed that the merger ratio was unfairly disadvantageous to the shareholders of Samsung C&T. At the shareholders’ meeting, which was convened to approve the merger, there was a conflict with the largest shareholder regarding use of a proxy, and a preliminary injunction asking the court to stop the merger was filed. However, Elliott failed to prevent the merger because it could not secure sufficient votes to block the merger.

In 2018, Elliott argued that the Korean government violated the Korea-US free trade agreement by unfairly intervening in the process of the merger and submitted an application for an investor-state dispute against the Korean government. In June 2023, the Permanent Court of Arbitration (PCA) rendered an award ordering the Korean government to pay approximately KRW130 billion; however, the Korean government ultimately prevailed in the annulment proceedings in the United Kingdom, and the award was set aside and the case was remanded to the arbitral proceedings.

In addition, labour unions and minority shareholders often raise claims about mergers and comprehensive share exchanges orchestrated by majority shareholders.