Hyundai Heavy Industries (HHI) has begun the process of seeking regulatory approval in Japan for its takeover of Daewoo Shipbuilding & Marine Engineering (DSME), reports say.
HHI is in the process of submitting an approval application to the Japan Fair Trade Commission, according to reports from South Korea's Yonhap news agency.
The yard needs to gain regulatory approval from South Korea, China, Kazakhstan, Singapore and the European Union for the mega-merger plan to go ahead.
Just one rejection would jeopardise the plan.
HHI's application to Japanese regulators will be made more difficult by the fact Tokyo removed South Korea from its list of trusted trade partners last month.
The move followed restrictions Japan imposed in July on exports of three vital high-tech materials used to manufacture semiconductors and displays.
Merger plan
HHI signed a deal worth an estimated KRW 2 trillion ($1.6bn) in March with DSME's largest shareholder, Korea Development Bank (KDB), to buy the embattled shipyard.
DSME will be controlled under a company called Korea Shipbuilding & Offshore Engineering.
HHI is being split into a holding company and a reorganised operating company to carry out shipbuilding.
The plan has been met with protests in Seoul and strikes that in May forced HHI to suspend production temporarily at its shipyards in Ulsan.
Workers claim the split will burden the operating company with huge debts, leading to restructuring and job cuts, but HHI says it will guarantee job security.
In June, unionised workers at DSME prevented a team from HHI carrying out due diligence ahead of the merger.
The process of receiving approvals from domestic and foreign regulators is ongoing.
In July, HHI filed an application for approval from China's State Administration.
HHI has already submitted an application to the Korea Fair Trade Commission, Kazakhstan and Singapore.
It is also in the preliminary process of submitting the application to the European Union.
