M&A Deregulation
SEJONG, March 5 (Yonhap) – South Korea is considering easing regulations restricting corporate merger and acquisition (M&A) activities, the top economic policymaker said Wednesday, in an effort to boost corporate investment and venture start-ups.
The move comes after the government recently unveiled its three-year economic innovation plan that focuses mostly on reforming regulations and economic structures. Boosting venture start-ups through M&As is also part of President Park Geun-hye’s signature long-term economic plan.
“The local M&A market is smaller than those in other advanced countries in terms of its scale, and it is further shrinking in the wake of the global financial crisis,” Finance Minister Hyun Oh-seok said at a meeting with other policymakers.
“A sluggish M&A market restricts companies from focusing their investment on core areas through voluntary business restructuring. This is serving as a hindrance to business restructuring and investment in small companies and venture start-ups, which are major pending issues,” he added.
Hyun said that the government is drawing up a package of measures aimed at easing regulations seen as hampering the active participation of private equity funds and strategic investors in the M&A market, from fundraising to recouping invested money.
The government will also streamline tax and financial support systems and rationalize the overall M&A procedures, he said. Steps will include enlarging the size of a growth fund established to help venture startups and their activities to 3 trillion won (US$2.8 billion) from the current 1 trillion won within three years, and increasing tax benefits to M&As carried out through a share exchange.
“The M&A-related measures will spark a shake-up of business structures, result in more investment in small and mid-sized enterprises and venture start-ups, and eventually help the vitality of our economy,” Hyun said.