If the possibility of converting into securities is certain, the expected effect is assumed
Reflected the increase in net asset value of’investment stocks without marketability’
When calculating the merger ratio between companies, the relevant regulations have been revised to reflect the real value of the target company. Accordingly, if the possibility of converting into securities is certain, factors such as capital increase should be calculated and reflected in the asset value. In addition, for investment stocks that are not marketable, the deduction is only reflected when the net asset value is lower than the acquisition cost. From now on, if the net asset value is higher than the acquisition cost, the increase should also be reflected.
The Financial Supervisory Service announced on the 5th that it has revised the’Enforcement Rules of Regulations on Issuance and Disclosure of Securities, etc.’, which contain details on improving the method of calculating asset value.
The Financial Supervisory Service explained that it has prepared this amendment so that the method of calculating the merger ratio can properly reflect changes in the accounting system and the real value of assets. The final revised bill was prepared by reflecting the opinions of experts from the Korea Certified Public Accounting Association and six major accounting firms, and from February 1st to March 15th, external opinions were collected through advance notice.
The revised bill contained a content to reflect the net assets and total number of issued stocks in the calculation of the asset value, assuming the effect of the conversion of securities, when the possibility of converting securities that can increase capital stock, such as convertible bonds, is certain.
When the net asset value of non-marketable investment stocks is higher than the acquisition cost, the increase is reflected. Previously, the difference was deducted only when the net asset value of non-marketable stocks was lower than the acquisition cost. Marketable investment stocks were evaluated at the market price of the analysis base.
In addition, treasury stocks were added at the end of the latest fiscal year, and the timing of adjustment was changed to match the timing of net asset valuation. The utilization of consolidated financial statements was also improved by preparing the basis for deduction of non-controlling standards so that the merger price could be calculated using consolidated financial statements.
In addition, the valuation method was improved so that the previous year’s error correction profit can be reflected in the asset value.
The revised enforcement regulations will be applied from the first major matter report submitted on or after the coming 12th.
An official from the Financial Supervisory Service said, “We have revised the relevant regulations so that the asset value used when calculating the merger ratio properly reflects the real value of the merged company.” It is expected that, along with the protection of shareholder rights, market confidence in the merger ratio will increase.”
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