This article was displayed on the ChosunBiz MoneyMove (MM) website at 3:47 p.m. on Aug. 31, 2026.
The Financial Services Commission is moving in earnest to prepare guidance on disclosures for corporate acquisition proposals. The aim is to clarify the standards for what information must be disclosed and by when when an acquisition proposal is received during a hostile merger and acquisition (M&A) process. The intent is to overhaul the disclosure system so that information asymmetry between the acquirer and the target corporations is reduced and ordinary shareholders can judge the conditions of the acquisition proposal and the reasonableness of the transaction.
According to the investment banking (IB) industry on the 31st, the Financial Services Commission recently selected KIM&CHANG as the adviser for a study to develop guidance on disclosures for corporate acquisition proposals. The Financial Services Commission plans to work with KIM&CHANG to review systems and cases related to acquisition proposals in major overseas countries and examine disclosure principles and detailed standards that can be applied to the domestic capital market.
This is a follow-up measure to the capital market system improvements promoted by the Financial Services Commission. In the domestic M&A market, there have often been cases where the details of negotiations between the acquirer and the target corporations were not sufficiently made known to the market until procedures stipulated by law, such as tender offers or large-shareholding reports, began. The point is that information asymmetry can arise because it is difficult for ordinary shareholders to grasp the transaction terms or the purpose of the acquisition as the acquisition proposal becomes concrete.
The Financial Services Commission is expected to consider a plan to provide relevant information to the market once a certain stage is reached, regardless of whether the acquisition proposal actually leads to a transaction. Along with deciding at what stage to disclose the contents and purpose of the acquisition proposal, the proposed price and the basis for its calculation, and the funding plan, a key issue will likely be how far to impose review and explanatory responsibilities on the board of directors of the target corporations that receive the acquisition proposal.
Major overseas countries set relatively concrete standards for information disclosure and the conduct of parties starting from the acquisition proposal stage. The United Kingdom regulates the information that the acquirer and the target corporations must disclose according to the stage of announcing an acquisition proposal through the Takeover Code. When a formal intention to acquire is announced, it requires disclosure not only of the acquisition price and terms but also of the method of financing the transaction and plans regarding the impact on the business and employment of the company to be acquired.
When a potential acquirer is publicly identified, the PUSU (Put Up or Shut Up) rule also applies. As a principle, it stipulates that within 28 days after the initial related disclosure, the party must either announce a formal intention to acquire or state that it will not proceed, preventing prolonged potential acquisition talks from continuing and sustaining management uncertainty at the target corporations.
Japan, rather than uniformly codifying detailed disclosure procedures like the United Kingdom, presents principles of conduct for the acquirer and the target corporations. In 2023, the Ministry of Economy, Trade and Industry of Japan prepared the Guidelines on Corporate Acquisitions, presenting corporate value and the common interests of shareholders, shareholder intent, and transparency as core principles. It included content stating that the board of directors of the target corporations receiving an acquisition proposal must review the proposal in good faith and provide the information necessary for shareholders to make a judgment.
Japan has since continued to supplement the guidelines in line with changes in the corporate acquisition market environment. In this way, overseas jurisdictions are also improving systems to enhance transparency in the acquisition proposal process and clarify the roles of boards and shareholders, suggesting that the Financial Services Commission will refer to overseas cases to develop standards suitable for the domestic context.
Ultimately, the key in this guidance is at what stage to treat an "acquisition proposal" as subject to disclosure. The crux is whether to distinguish between simple exploratory contact and proposals containing specific prices and terms and vary the timing and content of disclosure accordingly, and which side between the acquirer and the target corporations must disclose what information.
In addition, the Democratic Party of Korea is pushing to introduce a so-called "Korean-style bear hug" that strengthens the disclosure obligation for acquisition proposals. Oh Ki-hyeong, the Chairperson of the Democratic Party of Korea's Special Committee on K-Capital Market, is reportedly set to propose an amendment to the Financial Investment Services and Capital Markets Act this week. It is expected to include a plan requiring listed companies that meet certain conditions to mandatorily disclose to shareholders the contents when they receive an acquisition proposal reflecting a control premium.