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Disclosure for New Securities Offering

Public Offering

Public offering of new securities generally starts with the issuer (or the issuer's board of directors) deciding on the final proposal for a public offering. The issuer then submits a registration statement and the accompanying prospectus for the offering to the FSC/FSS for review. Following a waiting period, the issuer may begin soliciting investors and receiving subscriptions. Upon the completion of the offering and settlement of payments for transactions with investors, the issuer submits a report on the completed offering to the FSC/FSS and starts to issue the securities to investors (or registers the securities with the Korea Securities Depository). The securities are then listed and traded publicly.

Primary and Secondary Solicitations

Under the Financial Investment Services and Capital Markets Act, specific standards apply to issuers that solicit investors for new securities offering and for seasoned securities offering. Whereas primary solicitation refers to the act of soliciting 50 or more investors to purchase newly issued securities, secondary solicitation refers to the act of soliciting 50 or more investors to purchase or sell securities that have already been issued.

Registration Statement

Registration statement must be filed with the FSC/FSS when the offering amount is more than KRW1 billion. No solicitation for investors is permitted until the issuer files a registration statement with the FSC/FSS and obtains a clearance to proceed with the securities offering.

Reporting Person for Registration Statement

The reporting person or the person responsible for filing a registration statement for a securities offering is the issuer. Where a person other than the issuer engages in secondary solicitation, the reporting person is also the issuer.

Securities Subject to Reporting

Under the FSCMA, all securities offered through primary and secondary solicitations must in principle be registered. Securities exempted from registration are enumerated in the subordinate regulation; they include government treasuries, municipal bonds, and other special entities and enterprises that have been established by an act of the National Assembly.

Offering Amount Subject to Reporting

Registration must be filed when the amount of a securities offeringㅡthrough either primary solicitation or secondary solicitationㅡexceeds KRW1 billion. The amount of the securities offering is determined on the basis of the sum of the offering to be made for a year.

Waiting Period and Effective Date of Registration

Registration statement becomes effective when the waiting period for the FSC/FSS review of the filing (after it is accepted) ends. The issuer may not engage any solicitation prior to the filing of a registration statement, and registration statement that takes effect thereafter with an FSC/FSS clearance does not mean it is devoid of any misrepresentation or inaccuracy.

Waiting Period for Registration Statement

Waiting Period for Registration Statement
  Stocks Bonds Closed-end Funds Other securities
  General offering, Shareholder priority offering Allocation to shareholder, allocation to third party Guarantee bonds, Collateral-backed bonds, ABS Unguaranteed bonds
Listed companies 10 days 7 days 5 days 7 days 10 days 15 days
Others 15 days

Corrected Registration Statement

The issuer may submit a corrected registration statement for changes that need to be made to the initial registration statement. Changes to material disclosure items in the registration statement must be filed irrespective of the issuer's intent. The issuer must also submit a corrected registration statement upon a request or an order from the FSC/FSS.

Shelf Registration Statement

Shelf registration, which enables an issuer to register a public offering in advance and for multiple offerings using the same registration, is permitted for an issuer that meets all of the following criteria:

  • (a) The issuer is a financial investment services provider that has made a public offering during the most recent one-year period and has filed the regulatory semiannual and annual business report with the FSS during the most recent accounting year;
  • (b) The issuer has received an unqualified opinion for its financial statements from the issuer's external auditor for the most recent accounting year; and
  • (c) The issuer has not received any restriction or other adverse actions from the FSC/FSS on issuing securities during the previous one-year period.

Well-known seasoned issuers (WKSI) that meet all of the following conditions also qualify for shelf registration when issuing convertible bonds, bonds with warrants, participating bonds, and exchangeable bonds:

  • (a) More than 5 years have elapsed since the issuer became a listed company;
  • (b) The issuer's market capitalization on the last trading day of the issuer's most recent accounting period exceeded KRFW500 billion;
  • (c) The issuer has complied with the submission of the quarterly, semiannual, and annual business report to the FSS for the previous three years;
  • (d) The issuer has received an unqualified opinion from its auditor the most recent accounting year; and
  • (e) The issuer has not received a fine or a heavier sanction for accounting misconduct or violation of the FSCMA for the previous three years.

Effective Duration for Shelf Registration

Shelf registration enables an issuer to comply with the registration requirements up to one year from two months after the effective date of the registration. An issuer that files a shelf registration must make a minimum of three securities offerings during the expected offering period. Well-known seasoned issuers are eligible for shelf registration up to two years with no minimum number of securities offering required during the offering period.