I have an inquiry about SME M&A. What happens if I do not file a business combination report?

Hello. I am the M&A attorney at Daeryun Law LLC, and I see you are preparing an SME M&A right now.

The business combination report is, in principle, an ex post report filed after the combination is completed.

However, if one of the combining companies is a large-scale company whose total assets or revenue in the immediately preceding business year is 2 trillion won or more, a prior report must be filed as a mandatory matter.

It is a matter determined by considering the effect that the combination and the like will have on companies and the economy.

Depending on the type of transaction, this reporting period varies. The details are as follows.

▶ Acquisition of shares

Large-scale company : prior report after the conclusion of the contract and before completion of performance

Other than a large-scale company : within 30 days from the date of delivery of share certificates and the like

▶ Merger

Large-scale company : prior report after the conclusion of the contract and before completion of performance

Other than a large-scale company : within 30 days from the date of the merger registration

▶ Business transfer

Large-scale company : prior report after the conclusion of the contract and before completion of performance

Other than a large-scale company : within 30 days from the date of completion of payment of the business transfer price

If, despite having an obligation to file a business combination report, you did not file it, or filed false facts, an administrative fine is imposed.

In the case of a business operator, a business operators' association, or the same person or public-interest corporation controlling a company belonging to an enterprise group subject to disclosure, an administrative fine of up to 100 million won may be imposed.

In addition, in the case of an officer or employee of a company, a business operators' association, or a public-interest corporation, an administrative fine of up to 10 million won may be imposed.

In an SME M&A, what is important is preventing such legal risks in advance.

Therefore, before proceeding with the transaction, we recommend obtaining legal advice from an M&A attorney and then proceeding with the SME M&A in an organized manner.