South Korea's Financial Services Commission has proposed implementing rules for Capital Markets Act reforms that replace formulaic market-price calculations with fair-value assessments for mergers and other reorganizations by listed companies. Following the reforms’ parliamentary passage and Sept. 8 promulgation, the rules would support their scheduled Dec. 9 implementation by requiring valuations to consider market price, asset value and earnings value according to each transaction’s characteristics. The proposals would remove prescribed calculation formulas for transaction values and appraisal-right purchase prices. They would also require boards to disclose their assessment of a transaction’s purpose, expected benefits, pricing and any fairness safeguards, while external reviews would address valuation methods, key assumptions and valuation difficulties as well as price and transaction terms. For transactions between affiliates, filings would disclose specified links between related parties and the counterparty, while appraisal-right prices proposed after failed negotiations would require an external assessment and disclosure.

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