[THE INVESTOR] A special law for vitalization of the corporate sector and the economy is drawing attention as to whether it would be an efficient remedy for South Korea, which has been saddled with external and domestic uncertainties.

Both policymakers and ailing industries are pinning hopes on the Corporate Vitality Enhancement Act, which will take effect in about a month. The law, which was legislated in February, is designed to revitalize major industries, such as shipbuilding and steelmaking, which have been suffering from oversupply in the global market.

In particular, the law -- which is also dubbed the “one-shot” law -- is set to provide conglomerates with decent opportunities for streaming ailing business segments by merging affiliates with similar functions.

While the opportunity under the special law is destined to run three years through 2019, starting on Aug. 13, many conglomerates and smaller enterprises are expected to make the most of it as early as possible. Considering that it is a sort of present under the Park Geun-hye administration, participants will likely try to complete their “easy” restructuring process during her tenure, which expires in February 2018.

The coming law exempts qualified companies from the complex and cumbersome web of regulations scattered across existing laws. And the legislation will not only simplify the required procedures but allow new forms of business combination.

As a noteworthy point, any company will be entitled to push for a merger with another company without approval from its shareholders, if the target company’s market capitalization is less than 20 percent of its own market value.

The one-shot act is also projected to spur corporate governance reform as it will ease regulations on holding companies.

Simultaneously, the government should not be negligent in looking into feasibly dubious intragroup stakeholding during the process of normalizing the struggling firms. The units may be used as a tool to strengthen conglomerates’ family ownership structures in a low-key manner.

For instance as a side effect, it may motivate some unscrupulous entrepreneurs to abuse them in transferring corporate wealth and control rights to their children.

The assessment board is intended to address these concerns. Experts from the public and private sectors will have to carefully scrutinize restructuring plans and reject those that are intended to abuse the eased rules.

The Park administration had desperately sought to get the legislation passed, asserting that it is essential to rejuvenating Korea’s ailing industries. Now that the act is about to be implemented, the economic team led by Finance Minister Yoo Il-ho should be able to bolster the competitiveness of Korea’s major industries and thereby revitalize the faltering economy.

In the meantime, the financial authorities should brace for negative fallout on the stock market in the coming months.

The “tag along” right, which enables small shareholders to divest their investment on the same terms as the controlling shareholders, will have to be exercised within 10 days of a deal, down from the current 20 days.

The acquiring party will get three months, triple the time currently given to them, to complete the stock purchases from the minority shareholders, if the shares are listed on bourse. For M&As of non-listed firms, stock purchases must be completed within six months.