FSS: "IPO Securities Registration Statements to Undergo Intensive Review Within One Week... Minimizing Changes to Key Schedules"

The Financial Supervisory Service (FSS) announced on the 6th that it will minimize major schedule changes by conducting intensive reviews within one week of submission and holding at least one face-to-face consultation as a principle during the examination of securities registration statements for initial public offerings (IPOs). This move reflects the industry's concerns over frequent corrections to IPO securities registration statements causing schedule disruptions.

On the same day, the FSS held an ‘IPO Securities Registration Statement Review Meeting with Lead Managers’ and discussed industry difficulties and operational plans with executives in charge of IPO lead management from 17 securities firms with lead management records since 2022.

The lead managers stated that while it is desirable for corrections to IPO securities registration statements to ensure that important information for investment decisions is properly recorded to protect investors, there seems to be some confusion due to frequent changes in the FSS’s correction request policies. They also expressed concerns that excessive schedule changes in demand forecasting and subscription due to corrections could negatively impact subscriptions by damaging reputations. Furthermore, if correction requests are made just before the effective date without detailed explanations about the necessity, there could be misunderstandings that the FSS might not allow the listing.

According to the FSS, all 38 securities registration statements submitted by companies that went public or filed reports from January to May this year were followed by correction filings. Of these, 2 were due to correction requests issued by the FSS, and 36 were voluntary corrections. Among the 38 cases, 14 were corrected twice, and 8 were corrected three or more times. Consequently, major schedules such as demand forecasting and subscription dates were changed in 22 of the 38 cases. The delays ranged from a minimum of 7 days to a maximum of 125 days, with an average delay of 26 days. The 14 cases corrected twice experienced an average delay of 17 days, while the 8 cases corrected three or more times had an average delay of 44 days.

The FSS stated, “IPO securities registration statements are the most important issuance disclosure documents and undergo consistently strict review processes. There is no practice of operating the review process to directly modify the public offering price or to request corrections with the aim of causing listing failures, and actual major correction reasons are unrelated to such intentions.” It added, “Recent market dissatisfaction appears mainly due to schedule changes caused by corrections in some issuance cases. We are reviewing the impact of current review procedures, such as non-face-to-face reviews, on work efficiency including investment risk verification and communication of review matters, and are working on related procedural improvements.”

The FSS plans to operate the IPO securities registration statement review with the principles of ▲ intensive review within one week of submission and ▲ at least one face-to-face consultation (with the issuing company and lead manager) to minimize changes to major schedules such as demand forecasting and subscription dates.

However, the FSS emphasized that if important investor protection issues are not resolved despite intensive review, it will focus on the review until investment risks are sufficiently disclosed. An FSS official said, “IPO securities registration statements are the first disclosure documents submitted for stock listing, and there is a very high level of information asymmetry between companies and investors, so the company’s status and investment risks must be accurately and thoroughly disclosed.” The official added, “Since lead managers are legally obligated to conduct strict due diligence, we hope they will do their best in preparing IPO securities registration statements, including objective valuation and disclosure of investment risks, to enhance trust in their work.”

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