A law that passed the National Assembly on Thursday may spark a flurry of mergers and acquisitions, leading to consolidation in some oversupplied industries such as shipbuilding, construction and metals, experts said Friday.

Dubbed the “one shot act,” the special law envisions that three-year regulatory relief be granted to companies pushing for business realignment in industries judged by the government as suffering from oversupply. It would clear legal barriers associated with tax codes, commercial code and fair trade law when companies seek M&As or spin-offs.

“The key is its expected effect on spurring corporate restructuring and the adoption of a holding company-based governance structure,” said Baek Kwang-jae, an analyst at Kyobo Securities in Seoul.

“Big business groups will be among the law’s beneficiaries as they push to streamline business portfolio and improve corporate governance.”

The new law will make small-scale spin-offs, stock swaps and mergers easier by simplifying required procedures, such as getting final approval from shareholders. It would also allow new types of merger and acquisition structures to occur such as a reverse triangular merger and a triangular spin-off merger.

On the other hand, minority shareholders’ rights will be restricted.

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, 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 mergers and acquisitions of non-listed firms, stock purchases must be completed within six months.

The law comes as Korea’s major conglomerates, led by Samsung Group, rush to slim down and concentrate on core revenue sources and future-growth areas, selling noncore assets and merging related businesses into one.

The deregulation law is modeled after a business-invigoration law introduced by Japan in 1999 amid the country’s “lost decade” for growth. The Korean law is expected to take effect in the latter half of this year.

By Lee Sun-young (milaya@heraldcorp.com)