From August, First Issuance of Fractional Investment Contract Securities... Financial Supervisory Service Revamps Disclosure and Review System

Revision of Securities Registration Form... Reflecting Business Restructuring Requirements Such as Bankruptcy Isolation and Providing Standards
Dedicated Review Team for Investment Contract Securities Operated... Briefing on August 10 Regarding Reorganization Details

Ahead of the first issuance of investment contract securities in August, the Financial Supervisory Service (FSS) has revamped the related disclosure and review system.

On the 31st, the FSS announced that it has completely revised the investment contract securities form, which was previously close to a voluntary disclosure format, considering recent discussions related to investment contract securities. Starting from the 1st of next month, five fractional investment operators and new operators will also be able to submit securities registration statements for investment contract securities using the revised form.

Investment contract securities, first introduced in February 2009, have recently faced controversies over their securities nature with the emergence of token securities issuance (STO) fractional investments. The FSS undertook this reform anticipating the submission of securities registration statements by these operators following the approval of business restructuring for five fractional investment operators. The five companies are Stokkeeper (Bankau), Tessa, Seoul Auction Blue (Sotu), Together Art (Artogether), and Yeolmae Company (Art & Guide).

The FSS has fully revised the investment contract securities form, which was previously close to a voluntary disclosure format, starting today. First, to strengthen investor protection, the form now reflects business restructuring requirements such as bankruptcy isolation, which were applied to existing fractional investment operators. This allows investors to clearly understand whether new operators have the same business structure before investing.

The form also enhances issuer convenience by explicitly allowing multiple securities issuances within the same registration statement (cumulative issuance) and issuance of securities based on multiple assets (package issuance), thereby accommodating diverse market issuance demands.

To help disclosure users easily understand and invest in the unfamiliar investment contract securities, the FSS has introduced examples that allow for the inclusion of about 30 Q&A items related to the characteristics and issuance of investment contract securities, thereby improving comprehension.

Additionally, to ensure consistency and enhance expertise in reviewing investment contract securities, the FSS will operate a dedicated review team within the Disclosure Review Office for securities registration statements related to investment contract securities. This dedicated team will support smooth fundraising for sound companies and protect investors through meticulous reviews, including compliance with the revised form.

Considering that the rights and obligations of issuers, investors, and joint business participants vary depending on the content of investment contract securities, the FSS plans to conduct strict reviews focusing on the description of business and issuance structures and investor protection systems in the future.

Operators conducting businesses subject to investment contract securities who fail to submit securities registration statements will face sanctions such as fines, restrictions on securities issuance, and notification to investigative agencies.

Meanwhile, the FSS plans to hold a briefing session for corporations planning to issue securities on August 10th from 3 to 5 p.m. regarding the revised form and future review plans.

An FSS official stated, "We will continuously improve the disclosure form standards through the accumulation of review cases. If any weaknesses in investor protection are found during the review process, we will consult with the Financial Services Commission on institutional improvement measures such as regulatory amendments."

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