Preventing Post-IPO Stock Plunges... Lee Eogwon Reviews Lock-Up and SI Tax Benefit Systems

Financial authorities have decided to review related systems to prevent the decline in stock prices of startups after their initial public offerings (IPOs).

President Lee Jae-myung is speaking at the Capital Market Stabilization and Normalization Meeting held at the Blue House on the 18th. Photo by Yonhap News Agency

Lee Eogwon, Chairman of the Financial Services Commission, made this statement during the “Capital Market Stability and Normalization Meeting” presided over by President Lee Jaemyung at the Blue House on the 18th.

First, the authorities plan to examine a system that encourages venture capital (VC) firms to voluntarily lock up (hold in escrow) their shares. Chairman Lee said, "There is a system that awards additional points during the IPO review process if the lock-up period is extended, and I will look into it once again."

He also mentioned that measures to revitalize the exit market are under consideration. Chairman Lee explained, "There are many opinions that IPOs should not be the only means of investor exit, and that the exit market—including mergers and acquisitions (M&A)—needs to be further developed." He added, "The Korea Fund of Funds is also exploring various ways to stimulate the exit market."

Plans to enhance tax benefits for strategic investors (SI) are also under review. Chairman Lee said, "In order to promote M&A, the investment tax credit for large companies acting as strategic investors is already at a high level of 5%, but we will consult with tax authorities to see if there is room for further enhancement."

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