One-shot act to take effect

By Yoon Ja-young

A law aimed at helping corporate restructuring and mergers and acquisitions (M&As) of businesses will take effect Aug. 13, the Ministry of Trade, Industry and Energy (MOTIE) said Thursday.

The so-called One-Shot Act aims at helping the self-reform of businesses in industries caught in a global glut or slump. It facilitates business reform by providing support or pushing for deregulation regarding diverse issues such as taxes, funding, R&D and employment through a one-shot program.

Businesses seeking to benefit from the program can apply to the government.

Each application will be reviewed by a 20-member committee comprising government officials, experts from the private sector as well as those recommended by the National Assembly.

The ministry explained that the preemptive business reform will help strengthen the corporate competitive edge of the nation’s businesses, as seen in other countries such as the United States or Japan.

In the case of Japan which has a similar program, small and medium-sized firms (SMEs) or mid-tier firms are actively using the program. Seven out of 10 firms that went through the program had their productivity boosted above the average of the businesses listed on the Tokyo Stock Exchange.

The one-shot act includes facilitating M&As. When dividing or merging a small business, the company would only need approval from the Board of Directors instead of shareholders. When businesses reform by exchanging shares between subsidiaries, there will be tax support.

When a company is considering advancing into a new business, the government will check related regulations in advance to lessen its work. The government will also consider any alternate suggestions from companies on restrictive regulations.

The government also plans a 2.5 trillion won fund by Korea Development Bank (KDB) to support the reform. Enterprises seeking to enter a new industry and make investments in it will also be provided loans.

Labor expenses may also be covered for SMEs or mid-tier companies looking to recruit employees during restructuring. Regulations on loans will also be eased.

“It will accelerate and facilitate the restructuring of subsidiaries that have been ailing or suffering from uncertainties,” said Oh Jin-won, an analyst at Hana Financial Investment.