Last Year, 54 Requests for Amendment of Securities Registration Statements... 39% Amendment Requests on KOSDAQ

[Asia Economy Reporter Park Jihwan] Last year, the proportion of securities registration statements with omitted or unclear disclosures of significant corporate risks, which required corrections, increased. In particular, a substantial number of the corrected securities registration statements were concentrated among KOSDAQ-listed companies, with 40% of the statements receiving error notifications. Even among KOSPI-listed companies, which had rarely faced correction requests before, the number of deficient cases rose significantly. Securities registration statements are documents disclosed through financial supervisory authorities when a company issues securities such as stocks or bonds worth more than 1 billion KRW, containing information on the scale of fundraising and investment risks.

According to the "2020 Securities Registration Statement Analysis and Investor Precautions" released by the Financial Supervisory Service (FSS) on the 22nd, the total number of securities registration statements submitted by listed companies last year was 556, an increase of 60 cases (12.1%) from 496 cases the previous year. Among these, 54 cases, or 9.7% of the total, received correction requests. This was a significant increase compared to 25 and 32 cases in 2018 and 2019, respectively.

KOSDAQ-listed companies submitted 75 securities registration statements, of which 29 cases (38.7%) received correction requests. For KOSPI-listed companies, 14 out of 213 statements (6.6%) were requested for corrections. The correction request rate, which was about 0.5% the previous year, rose sharply to 6.6%. This was due to a significant increase in issues pointed out for companies engaged in rights offerings and mergers. KONEX companies had 2 cases, and unlisted companies had 9 correction requests. The highest proportion of correction requests, 40.9%, was for securities registration statements under the underwriting solicitation method, where the underwriter does not bear subscription responsibility.

Last year, the FSS explained that correction requests increased for IPO securities registration statements (mainly for special listing companies), which had not seen many correction requests before, due to strengthened reviews aimed at protecting new participants in the stock market. In fact, the average IPO subscription competition rate last year was 956:1, an 87.8% increase from 509:1 the previous year.

Correction requests were also frequently made for reasons such as insufficient disclosure related to changes in governance structure, entry into new businesses, and unclear purposes of fundraising. An FSS official stated, "As investors' interest in transparent governance and fund usage has increased, reviews of these items have been strengthened," adding, "There were many correction requests due to insufficient disclosure of merger prices and calculation bases, as well as investment risks." Additionally, many correction requests targeted companies with weak financial structures and management stability (a total of 39 companies).

The FSS presented risks related to new business entry, risks related to special cases for technology growth companies, and risks related to merger price calculations as major examples of correction requests, urging investors to exercise caution. An FSS official said, "To protect investors, we plan to focus reviews on the adequacy of investment risk disclosures for vulnerable companies and the appropriateness of merger price calculation bases."

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