The Financial Services Commission held a meeting with capital market participants, including the Financial Supervisory Service, Korea Financial Investment Association, and venture capital, to hear accounting difficulties for the expansion of 'productive finance'.
The Financial Services Commission announced that it held a meeting on the 12th at the Government Seoul Building to discuss this.
This meeting was arranged as a follow-up to the previous meeting chaired by the vice chairman of the Financial Services Commission on the 28th of last month with the heads of financial associations. The Financial Services Commission noted at that time that it would conduct a comprehensive review of supervisory practices for productive investment by financial companies.
First, it was said that accounting standards for 'perpetual redemption-preventing infrastructure funds' would be clarified. The Financial Supervisory Service and the Accounting Standards Board have allowed the evaluation gains and losses of closed-end infrastructure funds to be excluded from current profit and loss, ensuring no fluctuation in profit and loss on financial statements for long-term investments. Earlier, the financial investment industry conveyed to the financial authorities the need to clarify accounting treatment standards for closed-end infrastructure funds to energize long-term infrastructure investments.
The industry also proposed improvements to the guidelines for the fair value assessment of unlisted stocks. In particular, technology-based venture corporations requested that the scope of cost measurement be expanded to alleviate assessment burdens in cases where measuring at cost poses little risk of distorting accounting information.
They also proposed relaxing the accounting treatment for 'conditional equity acquisition contracts'. This method has both a liability character with an undetermined number of issued shares and share price, and a capital character with no maturity or interest. However, current accounting standards require it to be treated as a liability, resulting in an increase in the liabilities of the invested corporation. The industry requested improvements such as treating the investment in the invested corporation as 'capital'.
The Financial Services Commission said it plans to conduct a comprehensive review of areas with uncertainties in accounting treatment, including on-site difficulties, and will continue to identify tasks for improving the accounting system to be consumer-centered in collaboration with related agencies.