Financial authorities will differentiate their review methods based on how thorough securities registration statements are going forward. Registration statements from listed companies that fully explain to shareholders the need for fundraising and investment risks will be reviewed quickly, while statements that keep repeating insufficient explanations even after a correction request will be examined more closely.
On the 28th, the Financial Supervisory Service held a meeting with securities firms on initial public offerings (IPO) and rights offering underwriting and announced these improvements to the review of securities registration statements. It also listened to on-site difficulties to reflect them in future reviews and system operations.
Recently, the Financial Supervisory Service has been requesting corrections to poorly prepared securities registration statements, but cases in which shortcomings are found even after corrections and another correction is requested have been repeating. As a result, concerns have been raised that corporations' fundraising schedules could be delayed and the workload of supervisory staff could also increase.
In response, the Financial Supervisory Service will support smooth fundraising by corporations by promptly communicating review results for securities registration statements that thoroughly set out investment risk factors and the need for fundraising. At the meeting, it also presented examples of well-prepared securities registration statements.
By contrast, if key matters remain insufficiently supplemented even in the correction registration statement submitted after the initial correction request, it plans to inform the market of the review results in more detail. The Financial Supervisory Service will state in the correction request letter that "the submitted correction registration statement did not sufficiently reflect the requested corrections" and send it.
Lee Seung-woo, assistant deputy governor in charge of disclosure investigations at the Financial Supervisory Service, said, "Both providing investors with sufficient information and enabling corporations to raise funds smoothly through the capital market when needed are important," and added, "We will improve review efficiency through selection and concentration."
The Financial Supervisory Service is also pushing measures to shift the IPO market from a focus on short-term gains to medium- to long-term investment. After improving the mandatory lock-up commitment system for institutional investors last year, the lock-up commitment ratio rose sharply from 29% to 77.7%, but it judged that a large share concentrated on the relatively short 15-day commitment.
In addition, through pre-demand forecasts, IPO underwriters will provide corporate information to institutional investors so they can calculate a reasonable offering price, and through the cornerstone investor system, it will induce institutional investors to hold IPO shares for the long term.