Measures to Promote Financial Companies' Overseas Expansion: "Easing Reporting Obligations for Overseas Funds"

Simplifying Reporting Procedures That Cause Unnecessary Burdens
Removing Obstacles to Financial Companies' Overseas Expansion

[Asia Economy Reporter Park Sun-mi] Financial companies will no longer be required to file prior notifications for direct overseas fund investments under $20 million. There will also be no need to report changes in shareholding ratios for overseas fund investments.

On the 3rd, the Financial Services Commission announced that the "Regulations on Overseas Expansion of Financial Institutions" will be amended to promote the overseas expansion of financial companies.

First, the prior notification obligation will be removed for direct overseas fund investments under $20 million. Previously, direct investments through overseas funds required prior notification regardless of the amount. Going forward, for overseas fund investments as well, similar to overseas corporate investments, post-reporting within one month will be allowed for amounts under $20 million.

Financial companies had to report to the Financial Supervisory Service (FSS) when investing 10% or more in overseas funds, including changes in shareholding ratios, but now there will be no need to report every change in shareholding ratio for overseas fund investments. For fund investments, reporting obligations based on the 10% threshold will only apply to the initial investment, and if there are no additional increases, changes in shareholding ratios of domestic financial companies due to other investors' share changes will be exempt from reporting obligations.

Furthermore, routine business activities of overseas branches will be excluded from prior notification requirements. Until now, financial companies' overseas branches were required to report routine business activities such as securities transactions or loan transactions exceeding one year, but the system will be improved to respect the autonomy of financial companies regarding routine business activities by allowing post-reporting.

Submission documents for direct investments in overseas listed companies will also be simplified. Since investments in listed companies that are fairly valued in the market allow sufficient information to be obtained about the investee company, the obligation to submit stock valuation opinions will be exempted in principle.

These changes come as domestic financial companies' overseas direct investment scale has increased about threefold over the past five years (2015?2019), indicating active overseas expansion. However, current notification regulations require strict reporting procedures for overseas fund investments and classify routine business activities as reportable, which has been pointed out as an obstacle to financial companies' overseas expansion.

A Financial Services Commission official said, "We aim to amend the regulations to simplify reporting procedures that cause unnecessary burdens on financial companies' overseas business activities," adding, "This regulation will be announced as a Financial Services Commission notice, with a public comment period scheduled from November 4 to November 18, and is planned to be finalized through the Financial Services Commission's resolution within December."

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