Financial Services Commission to Restrict Multiple Applications for IPOs Starting May

[Asia Economy Reporter Park Jihwan] From May, duplicate subscription through multiple securities firms in public offering subscription by the general public will be prohibited.

On the 11th, the Financial Services Commission announced that it will publicly notify the amendment to the Enforcement Decree of the Capital Markets Act containing this content until the 20th of next month.

First, an institutional basis was established for Korea Securities Finance to restrict duplicate subscriptions for public offerings. According to the amendment, securities firms managing public offerings will be able to verify whether investors have made duplicate subscriptions through the Korea Securities Finance system when allocating public offering shares. If duplicate subscriptions are confirmed, duplicate allocations of public offering shares will not be made. Only the first subscription received will be recognized, and the remaining subscriptions will be treated as invalid.

The allocation procedure for employee stock ownership plans (ESOP) will also be revised. Currently, listed companies on the Korea Exchange are required to allocate at least 20% of the public offering volume to ESOPs. The amendment allows the ESOP association to request an allocation of less than 20% of the public offering volume in advance, and exempts the mandatory allocation for the shortfall in the requested amount.

The amendment also includes provisions to establish information barriers (Chinese walls) within financial investment companies on a per information unit basis. Until now, financial investment companies have set up Chinese walls between corporate finance operations, proprietary asset management, and financial investment operations to block information exchange.

In the amendment, the information subject to exchange blocking is defined as 'material non-public information' and 'information related to customer asset trading and management.' Instead, a voluntary regulatory system centered on internal control standards related to information exchange blocking will be established and operated. The internal control standards will include blocking methods, exceptional exchange-related matters, types of transactions with conflict of interest concerns, and countermeasures. Companies will be required to designate an executive-level officer responsible for overseeing the operation of internal control standards and to disclose major details.

Furthermore, the method for investors to express their intentions will be expanded from the existing written form to also allow telephone, fax, and email, thereby enhancing investor convenience.

This content was produced with the assistance of AI translation services.