I OVERVIEW OF M&A ACTIVITY
Korean M&A activity in 2017 was very lively, with 1,087 completed cases and a total value of US$75.4 billion (a 53.9 per cent increase from 2016).2 Note, however, that the number of transactions decreased by 5.4 per cent from 2016, which suggests that the increase in overall M&A deal value was driven by larger deals.
Domestic M&A activity involving Korean companies showed a marked increase, with 505 acquisitions of Korean companies by other Korean companies (up from 468 in 2016) worth US$39.4 billion (up from US$24 billion in 2016).3 This increase in domestic M&A activity is generally credited to continuing global economic growth and economic recovery in Korea. There was a particular uplift in domestic M&A transactions in the electronics, petrochemicals, pharmaceuticals, distributions, logistics and communications industries.
The deal value of inbound M&A (i.e., overseas companies acquiring Korean companies) increased, while the number of transactions decreased, with 41 transactions (down from 47 in 2016) worth US$8.8 billion (up from US$2.9 billion in 2016). More detailed discussion about foreign direct investment into Korea follows in Section IV.
II GENERAL INTRODUCTION TO THE LEGAL FRAMEWORK FOR M&A
Acquisitions of private companies are primarily governed by the Korean Commercial Code (KCC), the Financial Investment Services and Capital Markets Act (the Capital Markets Act) and the Monopoly Regulation and Fair Trade Act (MRFTA).
The KCC contains the main rules for corporate structure and governance, including requirements for, and limits on, mergers, share acquisitions, spin-offs and asset transfers. As such, the KCC influences the transaction structure and dictates corporate approval requirements for both public and private companies. The KCC also governs directors' fiduciary duties, regulations on self-dealing and other corporate conflicts of interest.
The Capital Markets Act applies to public companies listed on the Korea Exchange (KRX), which includes the KOSPI, KOSDAQ and KONEX markets. The Capital Markets Act imposes disclosure requirements and other restrictions on trading in KRX-listed shares. It also prescribes rules for tender offers. Further, M&A deals involving public companies are subject to KRX disclosure rules and scrutiny by the Financial Supervisory Service (FSS), the enforcement arm of the Financial Supervisory Commission (FSC). The FSC, through the FSS, generally administers the financial, banking and securities system.
Under the MRFTA, which is the main antitrust statute, acquisitions and other combinations involving companies satisfying certain revenue and assets thresholds will require an antitrust review by the KFTC.
The Foreign Investment Promotion Act and Foreign Exchange Transactions Act govern foreign direct investments (FDIs) and foreign exchange transactions involving foreign investors in Korea. Foreign investments generally require a report to a foreign exchange bank, which is in most cases a formality, and acceptance of the report is usually granted within a few days.
While foreign investors are, in principle, not prohibited from acquiring shares in a Korean company, there are prohibitions or limits on foreign ownership in Korean companies engaging in certain industries considered to be vital to the national interest, such as defence, broadcasting, telecommunications, publishing and public utilities.
III DEVELOPMENTS IN CORPORATE AND TAKEOVER LAW AND THEIR IMPACT
i Recent amendments to KCC
Major amendments to the KCC were passed on 1 December 2015 and came into effect on 2 March 2016. These amendments were drafted with the explicit intention of invigorating the M&A market by enabling the use of M&A structures previously unavailable in Korea.
The KCC amendments provided for triangular share swaps, reverse triangular mergers and triangular spin-off mergers. Under those structures, parent company shares can be offered as consideration. Specifically, (1) parent company shares of the acquiring company are provided as consideration to target company shareholders in a triangular share swap or a reverse triangular merger, and (2) parent company shares are provided to spun-off subsidiary company shareholders under a triangular spin-off merger. Those amendments are expected to facilitate more flexibility in M&A transactions by enabling cash-free mergers, as well as opening up new possibilities for structuring cross-border M&A transactions involving entities in overseas jurisdictions.
Further, the KCC amendments relaxed the threshold for small-scale share swaps (which can be approved by a board of directors instead of the more onerous requirement of shareholder approval) from 5 per cent of total issued and outstanding shares to 10 per cent of total issued and outstanding shares.
Lastly, the KCC amendments have introduced a simplified business and asset transfer, whereby a transfer can be approved by a board of directors' resolution if the counterparty to the transaction owns more than 90 per cent of the transferring company's shares.
ii Recent amendments to Capital Markets Act
Amendments to the Capital Markets Act came into effect on 1 May 2018 to tighten the disclosure obligations for shareholding dilution. Before the amendment, if a listed company offered new shares other than by way of pro rata subscription by existing shareholders, entailing dilution of existing shareholders, an exemption from the usual requirement of two weeks' prior notice under the KCC applied, which meant that most shareholders discovered the dilution after the fact. Under the amended Capital Markets Act, disclosure is required at least one week before the payment date in respect of the subscription price.
Before its expiry in 2018, owing to the sunset clause in the Capital Markets Act, the Korea Securities Depository (KSD) was allowed to exercise the unused voting rights of the shares deposited in the KSD, mirroring the actual votes exercised at the general shareholders meetings of listed companies. This 'shadow voting' was allowed because minority shareholders usually did not attend the general shareholders' meeting and it was a common occurrence that the quorum of 25 per cent of the issued and outstanding shares (required under the KCC) could not be satisfied. The difficulty in achieving a quorum is more serious in relation to the appointment of statutory auditors, as each shareholder's voting right for the appointment of a statutory auditor is limited to 3 per cent, and even if the controlling shareholder holds more than 25 per cent of the shares, the quorum can only be satisfied if other minority shareholders exercise their rights to surpass the quorum threshold of 25 per cent. Yungjin Pharmaceuticals, a KRX-listed company, was unable to appoint a statutory auditor at its 2018 annual general shareholders' meeting, as only 9 per cent (of minority holdings of 47.55 per cent) of its minority shareholders attended, and the quorum for appointing a statutory auditor could not be satisfied. Currently, the solutions being discussed for this issue are (1) to introduce an electronic voting system for general shareholders' meetings to facilitate minority shareholder participation, and (2) to encourage companies to more actively court minority shareholders to participate or grant proxies.
iii Recent amendments to employment law, tax law and competition law
See Sections VII.i, VIII.i and IX.ii, respectively.
IV FOREIGN INVOLVEMENT IN M&A TRANSACTIONS
Within the total FDI amount above, which includes both M&A investments and follow-up investments by foreign investors in Korea, FDI by way of M&A was US$7.24 billion (a 15.4 per cent increase from 2016, on the basis of publicly filed information).
Considering the major geopolitical risks associated with Korea during 2017, this increase in FDI is interpreted as showing worldwide recognition of Korea as a stable investment destination, as well as reflecting an increase in foreign investment in Korean conglomerates and increasing investment in new IT technologies such as blockchain technology and self-driving vehicle technology.
As of June 2017 (half-year basis), the top 10 countries investing in Korea are as follows:6
|Ranking||Country||Investment amount (US$ million)|
V SIGNIFICANT TRANSACTIONS, KEY TRENDS AND HOT INDUSTRIES
i Significant transactions
Among others, notable significant transactions in the Korean M&A market announced in 2017 included the following:
|Transaction||Industry||Deal amount (US$ million)|
|Acquisition of Toshiba's semiconductor business by Bain Capital consortium, including SK Hynix of Korea||Semiconductor||19,000|
|Unilever's acquisition of Carver Korea from Bain Capital consortium||Cosmetics||2,710|
|KKR's acquisition of LS Automotive from LS Group||Auto parts||943|
|Acquisition of Lock & Lock by Affinity Equity Partners||Consumer goods||561|
|Joint venture investment by Texas Pacific Group consortium on Kakao Mobility||Mobility platform||450|
ii Key trends
One notable development in the Korean M&A market in 2017 was the rapid growth in the participation of private equity fund (PEF) players, in comparison with more conservative activity by domestic conglomerates. As seen in the table above, large PEFs such as Bain Capital, MBK Partners, KKR and Affinity Equity Partners were the most active participants in the market, being involved in seven of the top 10 M&A transactions in 2017.7 Their market activity in 2018 is also expected to be significant, utilising funds from global capital markets or exiting from their previous investments. Further, while PEFs in the Korean M&A market previously tended to focus on buyouts to ensure short-term returns, PEFs are now starting to show interest in long-term investments in medium-sized firms, especially in consortiums with strategic investors. Notable examples are the acquisition of Hyosung Packaging (a PET bottle company) by a Standard Chartered private equity consortium in partnership with Samyang Group, and the acquisition of Tapex (a taping company) by an NH Investment and Securities consortium in partnership with Hansol Chemical.
Another development is the increase in carve-out transactions, in which the parent company spins off a subsidiary and sells a minority stake in the spun-off subsidiary to outside investors. Korean companies are using carve-out structures to achieve various goals, for example, to divest non-core businesses and focus on core businesses or to attract investments to certain particular business divisions, and it is expected that carve-out transactions will comprise a significant portion of the Korean M&A market in 2018. One recent example is the sale of existing shares by Kakao Corp and issuance of new shares by Kakao Mobility, which had been established by Kakao Corp by way of in-kind contribution of Kakao Taxi and other auto-related businesses to a consortium led by TPG. With the new capital raised from the consortium, Kakao Corp and Kakao Mobility strengthened their position to develop and launch new premium taxi app services.
Finally, inbound transactions in 2017 showed a volume increase of 79 per cent over 2016, with an aggregate value of US$7.3 billion over 42 transactions.8 Notable inbound transactions in 2017 were Unilever's acquisition of Carver Korea (a cosmetics company) and the acquisition of Lock & Lock (a food container maker) by Affinity Equity Partners.
iii Hot industries
According to the KFTC's 2017 M&A Review, large domestic conglomerates invested in companies driving the fourth industrial revolution while foreign companies increased their investments in domestic cosmetics and bio-pharmaceutical companies. Specifically, while the share of M&A transactions (on the basis of number of deals) in the electronics, petrochemicals and pharmaceuticals, distribution and telecommunications industries has increased, the share of M&A transactions in the machinery, metals and non-metals, finance and construction industries has declined.
VI FINANCING OF M&A: MAIN SOURCES AND DEVELOPMENTS
i Leveraged buyouts
Korean statutory law and court precedents prohibit certain forms of leveraged buyout (LBO) as illegal asset-stripping, and a clear-cut standard on whether a given financing structure is permissible for a given transaction structure has not been provided to date.
Based on recent court precedents, it is generally understood that LBO financing structures that directly use the target company's assets as collateral are likely to be prohibited. However, a 2015 Korean Supreme Court judgment9 ruled that an LBO that involved establishing security on target company assets can be allowed, considering, among other things, that:
- the acquiring company acquired 100 per cent of the target company and as such no minority shareholders were harmed by the transaction;
- a critical portion of the funding for the transaction (approximately 43 per cent) was supplied by the acquirer;
- the acquiring company was not a 'paper company' but a listed company with substantive assets; and
- there was no substantive or procedural defect in the merger following the acquisition.
While this judgment does not seem to rule that LBO financing structures that use the target company's assets as collateral are generally allowed, it can be seen that in certain cases such financing structures are permissible, depending on the entirety of the circumstances.
On the other hand, indirect LBO financing in cases where (1) the acquiring company (which borrowed the purchase price) is merged with the target company, or (2) the target company provides funding to the acquiring vehicle by capital reduction, are likely to be allowed, assuming that the necessary corporate approvals and procedures are obtained and observed.
Overall, LBO financing is being used more often in the Korean M&A market compared with previous years.
ii Total return swaps
A total return swap (TRS) is an instrument under which (1) the total return payer (who will acquire a partial stake in the target company) agrees to pay the total return recipient the increase in the value of the stake or dividends derived from the stake, and (2) in exchange, the total return recipient agrees to pay a fixed fee to the total return payer or any decrease in the value of the stake.
Although it is arguable whether a TRS constitutes a true sale, M&A transactions using the TRS are being seen more commonly in the Korean M&A market. For the acquisition of KT Rental in 2015, Lotte Group financed approximately US$290 million (of a total purchase price of US$1.1 billion) using the TRS structure.
VII EMPLOYMENT LAW
i Recent amendments to employment law
Nearly four years after revisions to the law were first proposed, the Korean National Assembly passed a Bill on 28 February 2018 to amend the Labour Standards Act to reduce Korea's maximum weekly working hours. The new law will reduce maximum weekly working hours from 68 per week to 52. The new law became effective on 1 July 2018; currently, it applies only to large companies but will be rolled out in stages to smaller companies. Employers who fail to comply with this new law will be subject to criminal penalties of imprisonment for up to two years or a fine of up to 20 million won.
In this regard, based on the foregoing, when entering into M&A transactions, buyers will need to confirm whether the working conditions of target companies are in compliance with the new laws to avoid any such criminal penalties or compliance issues.
ii Recent court decision
The Act on the Protection of Dispatched Workers (the Dispatched Workers Act) regulates the use of employees of another company by way of 'worker dispatch'. Under the Dispatched Workers Act, worker dispatch refers to a system in which a dispatching company, while maintaining the employment relationship with its employee, causes its employee to work for another company under the supervision and direction of the receiving company in accordance with a dispatch agreement between the two companies.
Outsourcing is similar to worker dispatch in that the receiving company uses the employees of the outsourcing company for the work of the receiving company. However, there is a general distinction between outsourcing of work, which is not subject to the Dispatched Workers Act, and worker dispatch regulated under the Dispatched Workers Act, based on whether the employee is supervised or controlled by his or her own employer or the receiving company. If the employee is supervised or controlled directly by the receiving company for the performance of his or her work, he or she will be regarded as a dispatched worker under the Dispatched Workers Act.
In September 2017, as a result of a labour inspection it conducted, the Ministry of Employment and Labour (MOEL) discovered that Paris Baguette had been retaining bakers at its franchise stores via illegal worker dispatch and ordered Paris Baguette to directly hire 5,378 bakers. The MOEL regarded Paris Baguette as a receiving company under the Dispatched Workers Act in relation to the bakers, principally, on the grounds that, among others, (1) Paris Baguette established and put into place uniform criteria for general management of personnel matters, including recruitment, promotion, evaluation and wage levels, and (2) Paris Baguette's quality manager managed the attendance times of bakers and generally supervised and directed the bakers in their duties. Moving forwards, there is a strong possibility that the MOEL will use the criteria applied in its determination of the Paris Baguette case to assess alleged cases of illegal worker dispatch in transaction structures similar to the above case.
In this regard, based on the foregoing, when entering into M&A transactions, buyers will need to confirm whether the target companies are in compliance with the Dispatched Workers Act to avoid being ordered to hire any unexpected additional employees on a permanent basis after closing the transaction.
VIII TAX LAW
i Recent amendments to tax law
The key features of recent amendments to tax laws are as follows.
Relief from VAT for business transfers
Under the current law, a comprehensive business transfer is not subject to value added tax (VAT). Where only selected assets or liabilities are transferred, the transaction is classified as an asset transfer and the transferor is required to issue valid VAT invoices and file a VAT return. However, from a practical standpoint, it is actually difficult for taxpayers to determine whether a transaction is a comprehensive business transfer or an asset transfer. There was a risk that input VAT would not be refundable if the transaction was treated by the parties as an asset transfer at the initial stage of the transaction and later determined to be a comprehensive business transfer by tax authorities. Therefore, taxpayers had to obtain a ruling from the tax authorities to gain certainty as to the type of transaction. According to the amended tax laws, which became effective on 1 January 2014, the transferee is allowed to credit the input VAT on a proxy basis when VAT is paid to the relevant tax authorities by the 10th day of the following month after completion of the transaction.
Employment succession requirements to satisfy tax-free merger and demerger conditions
Under the former law, a merger or demerger would be treated as tax-free if certain requirements were met, such as business purpose, continuity of interest and continuity of business. Amendments to the tax law effective from 19 December 2017 imposed the continuity of employment requirement as an additional condition for the tax-free treatment of a merger or demerger. Under the new requirement, 80 per cent or more of the employees of the transferred business must continue to be employed by the surviving entity until the end of the fiscal year during which the merger or demerger is registered.
However, a tax-free merger or demerger may become taxable upon the occurrence of certain trigger events within three years of the end of the fiscal year during which the merger or demerger is registered. The trigger events include discontinuity of interest and discontinuity of business. The revised tax law added discontinuity of employment as a new trigger event. To maintain a tax-free merger, the total number of employees of the surviving entity must be 80 per cent or more of the combined total number of employees of both entities. Similarly, to maintain a tax-free demerger, the total number of the spun-off entity's employees must be 80 per cent or more of the total number in the pre-demerger spun-off business.
Relief from tax-free in-kind contribution requirements
Previously, corporate income tax on capital gains arising from qualified in-kind contributions was deferred if all the following conditions were met:
- the investing company is engaged in the business for five years or more;
- the investing company owns 80 per cent or more of the shares in the invested company, and continues to hold those shares until the end of the year in which the in-kind contribution is made;
- the invested company carries on the transferred business until the year end; and
- a separate and independent business division is transferred to the invested company. It was not regarded as a transfer of a separate and independent business division if the investing company contributed only certain holding stocks and related assets and liabilities to the invested company.
The tax law as amended on 19 December 2017 abolished the fourth requirement with a view to facilitating corporate restructuring. On or after 1 January 2018, the tax-free in-kind contribution requirements will be met even if the investing company only contributes stocks, if the other three requirements are met.
Expansion of tax-free merger incentives
Under the former law, a vertical merger between a parent company and its 100 per cent-owned subsidiary was considered a tax-free merger without having to satisfy any further conditions. According to the tax law as amended on 19 December 2017, in addition, a horizontal merger between brother–sister entities that are 100 per cent held by the same parent company are eligible for tax-free treatment without the need to satisfy any further conditions on or after 1 January 2018.
Capital gains tax on transfer of SME shares by major shareholders
Capital gains tax on the transfer of shares in small and medium-sized enterprises (SMEs) was previously imposed at 10 per cent, irrespective of the size of the shareholder's stake. The tax law as revised on 15 December 2015 increased the capital gains tax rate on the transfer of SME shares owned by major shareholders from 10 per cent to 20 per cent on or after 1 January 2016.
The original 2018 tax reform proposal included an increase in the tax rate from 20 per cent to 25 per cent on the tax base exceeding 300 million won for capital gains earned by a large shareholder, which would be effective for share transfers from 1 January 2018. Under the approved Bill, application of the increased tax rate is postponed for one year for the transfer of shares in SMEs and will be effective from 1 January 2019. This trend of increase in the capital gains tax rate on the transfer of SME shares led to an increase in M&A activity among private companies.
ii Recent court decision
In a case with respect to a share transfer, the Supreme Court decided that cash bonus compensation (M&A bonus) to employees of an acquired company should be an expense borne by the acquired company rather than the buyer of the acquired company. The acquired company paid an M&A bonus to its employees and deducted the M&A bonus in its corporate income tax return. However, the tax authorities denied deductibility of the M&A bonus on the basis of their assertion that it should have been an expense borne by the buyer of the acquired company's shares as opposed to the acquired company itself.
The Supreme Court held that there was a reasonable basis for the acquired company to pay the M&A bonus considering the fact that it was paid to employees who served the acquired company, that the amount of the M&A bonus was reasonably decided in consideration of the operating income of the year, and that it was not out of the ordinary course of business for the acquired company to pay compensation to its employees to prevent or terminate strikes.
IX COMPETITION LAW
According to the KFTC's 2017 M&A Review, companies notified the KFTC of 688 reportable transactions during 2017, which is a slight increase on the 646 transactions notified in 2016. The KFTC challenged and conditionally approved only four transactions in efforts to protect competition in the industrial sectors, including petrochemicals (Dow/DuPont), industrial equipment for the energy market (Esmeralda/DS-Power), container shipping services (Maersk/HSDG) and cable television services (SK Telecom/CJ Hello-Vision).
ii Recent amendments to competition law
During 2017, there were a couple of notable regulatory changes in the context of merger control: an increase in the jurisdictional thresholds and curtailment of the review period for a transaction that is judged in voluntary prior consultation as one that is unlikely to raise competitive concern. Additionally, the KFTC has indicated that it intends to address competition issues involving big data and digital economy in the context of M&A transactions during 2018.
In October 2017, the KFTC announced increased jurisdictional thresholds for merger notification under the MRFTA. Under the previous merger notification regime, a transaction was required to be reported if a party to the transaction incurred global revenue (or possessed global assets) of at least 200 billion won in the preceding fiscal year and the other party to the transaction had global revenue (or possessed global assets) of at least 20 billion won. These threshold amounts were increased to 300 billion won and 30 billion won respectively and came into force on 19 October 2017. Transactions entered into after 19 October 2017 are subject to the new thresholds. On the other hand, the domestic revenue threshold for foreign-to-foreign mergers, which refer to mergers and acquisitions involving non-Korean companies, has increased as well. For a foreign-to-foreign merger to be reportable, a foreign company involved in the foreign-to-foreign merger is required to have generated sales in or into Korea of at least 30 billion won in the preceding fiscal year in addition to satisfaction of the global revenue and asset thresholds noted above. Prior to the amendment to the MRFTA, the figure was 20 billion won. According to the KFTC's 2017 M&A Review, the increased thresholds are likely to reduce the number of merger notifications to the KFTC by 50 cases per year.
The other notable change to merger control law is an extension of the scope of the simplified review procedure. The benefits of the simplified review procedure – a short-form notification and a shorter waiting period (15 calendar days) – have been extended to transactions that are evaluated in voluntary prior consultation as competitively neutral transactions or transactions in which pro-competitive effects outweigh anticompetitive effects. The MRFTA allows the parties contemplating a potentially reportable transaction to request the KFTC's preliminary or prior review even before signing a preliminary agreement in respect of the transaction. This voluntary prior consultation is often used to prevent unnecessary delay in a merger review after a formal notification has been submitted following execution of a definitive agreement. In practice, if no competitive concern is found in the voluntary prior consultation, the proposed transaction usually passes the formal merger review without difficulty unless substantial changes are made to the deal structure that was notified to the KFTC in the voluntary prior consultation. However, in the past, the notifying party or parties still had to file a full-length notification for the subsequent formal merger review, which is a lengthy form that requires a significant amount of corporate and market data, and were obliged to wait 30 calendar days for receipt of the KFTC's final approval (although early approval was sometimes granted). Thus, the amendment to the MRFTA has established a consistent procedural approach to transactions that are not likely to raise competitive concerns.
iii Contemplated changes in competition law
Apart from changes to the jurisdictional thresholds, the KFTC is contemplating an additional notification threshold for 'unicorn' deals. The current approach is relatively straightforward but may not cover transactions involving highly valuable start-ups, which at the time of transaction may not have significant revenues or assets meeting the thresholds, but whose deal valuation is relatively high in anticipation of their potential importance in the markets (known as 'unicorn' start-ups). The United States, Austria and Germany are a few of the countries that have introduced thresholds based on transaction value. If adopted, the size-of-transaction test would intensify competition law enforcement in the era of the digital economy. However, this proposal is still under consideration and open for further discussion.
In addition, the KFTC appears to be considering the role of big data in merger reviews. On 30 January 2018, the KFTC responded in its testimony to the Congressional Special Committee for the Fourth Industrial Revolution that it will be mindful of likely adverse effects on innovation in connection with its merger review of transactions in the big data-driven market. No indication of drastic changes to the analytical approach to competition issues regarding big data has been observed but the KFTC clearly voiced in its testimony that a company may be found to have dominant market power because of its ownership of and control over valuable data in spite of a low market share. Much has been said about big-data-related theories of harm. The KFTC seems to be concerned that control over big data can create barriers to entry in particular in a situation where a company holds a unique dataset that cannot be replicated by its competitors without incurring substantial time and cost. Thus, the KFTC is likely to actively monitor the effects of big data on fostering competition in relevant markets.
Considering the projected recovery of the Korean economy (3 per cent gross domestic product (GDP) growth forecast)10 and the global economy (3.9 per cent GDP growth forecast),11 it is anticipated that the Korean domestic M&A market, as well as inbound and outbound M&A, will show increased activity in 2018. However, continued geopolitical uncertainties, potential global trade wars and increased government regulation may reduce M&A activity.
For the domestic M&A market, it is expected that PEFs will continue active participation in the market, fuelled by plentiful liquidity, and carve-out transactions by companies seeking to strengthen their core business areas will increase. For the inbound and outbound markets, general global recovery is expected to contribute to increased M&A activity, but considering the Korean economy's global connectedness, the Korean M&A market will be highly exposed to global economic and regulatory risks.
1 Ho Kyung Chang is a partner, Alan Peum Joo Lee is an associate and Robert Dooley is a foreign attorney at Bae, Kim & Lee LLC. The authors would like to thank their colleagues Ben Gu, Namwoo Kim and Eun Hong Lee for their significant assistance in preparing this chapter.
2 'Thomson Reuters, Merger & Acquisitions Review 2017' (https://www.thomsonreuters.co.jp/content/dam/openweb/documents/pdf/japan/market-review/2017/ma-4q-2017-e.pdf).
3 References to M&A activity are based on the deals notified to the Korea Fair Trade Commission (KFTC) during 2017 and reported in a press release issued by the KFTC on 19 February 2018 providing merger notification data for fiscal year 2017 (KFTC's 2017 M&A Review).
4 In this context, FDI means the investment by foreign individuals or entities into Korean entities (1) of more than 100 million won (approximately US$92,500) and (2) representing 10 per cent or more of the voting shares of the Korean entity.
5 Korea Trade-Investment Promotion Agency Foreign Investment Ombudsman Annual Report 2017.
6 Ministry of Trade, Industry and Energy and Korea Trade-Investment Promotion Agency, 'Foreign Direct Investment Reference Data', September 2017.
7 2017 Invest Chosun league table (announced transaction size).
8 Mergermarket, 'South Korea Trend Report Q1–Q4 2017'.
9 Korean Supreme Court, 12 March 2015, 2012Do148 Judgment.
10 Bank of Korea forecast, January 2018.
11 IMF World Economic Outlook, April 2018.