Seoul: The Republic of Korea’s financial regulator announced plans to implement stricter regulations for institutional investments in newly listed companies as part of efforts to enhance related regulations. Additionally, companies failing to meet listing requirements will face expedited delisting processes under new rules introduced by the Financial Services Commission (FSC).
According to Lao News Agency, starting next year, more than 40 percent of initial public offering (IPO) shares will be allocated to institutional investors who agree to retain their holdings for a specified period, typically three or six months. This is a significant increase from the current 20 percent allocation aimed at facilitating a smoother market debut for new companies.
The move is a response to criticisms faced by some institutional investors who have been accused of profiting by selling IPO shares on their first trading day. The FSC intends to address these concerns through the proposed measures.
The commission also plans to overhaul delisting regulations to hasten the removal of companies that do not meet certain criteria. By 2029, companies with a market capitalization below 50 billion won (approximately US$3.47 million) and revenues under 30 billion won will be delisted from the main bourse.
Under current regulations, a company is delisted if its market capitalization or sales fall below 5 billion won. The new rules will shorten the delisting process to a maximum of two years, down from four years. Furthermore, a company will face immediate delisting if it receives inappropriate audit reports for two consecutive years, as per the FSC’s new guidelines.