The Financial Services Commission has announced measures to improve the capital market system for foreign investors in Korea. The foreign investor registration system, which required prior registration for investing in listed securities, will be abolished. Instead, securities firms will be able to open accounts immediately through real-name verification procedures. The obligation to report investment details of the final investor in the consolidated account will also be abolished. The scope of reporting after-hours transactions will be expanded to increase convenience. Additionally, English disclosure requirements will be gradually implemented for KOSPI-listed companies with specific criteria, along with support for English disclosure initiatives. These changes aim to enhance the investment environment for foreign investors and promote transparency in the Korean capital market.
The main points of the announcements are as follows:
I. Abolishing the Foreign Investor Registration System:
- The foreign investor registration system, in place since 1992, will be abolished.
- Foreigners will be able to invest in listed securities in Korea without prior registration procedures.
- Relevant laws and regulations will be revised to allow securities firms to open accounts immediately through real-name verification procedures.
II. Activating an Integrated Foreign Account (Omnibus Account):
- The obligation to immediately report investment details of the final investor in the consolidated account will be abolished.
- An integrated foreign account refers to an account opened under the name of a global operator or securities company to integrate stock trading of multiple investors.
- Final investors will report investment details, and securities firms with integrated accounts will manage the details.
III. Improving Convenience of Over-the-Counter Transactions by Foreigners:
- The scope of reporting after-hours transactions will be expanded to increase convenience.
- Foreign investors' listed securities transactions were mostly in-house transactions, with over-the-counter transactions requiring prior approval in exceptional cases.
- Certain transactions, such as fund mergers and in-kind investments due to corporate restructuring, will be exempt from prior approval.
IV. Step-by-Step Expansion of English Disclosure:
- Companies will be required to make English disclosures gradually.
- Starting in 2024, KOSPI-listed companies with assets of 10 trillion won or a foreign stake of 30% or more must disclose information in English within three business days.
- Starting in 2026, English disclosure will be expanded to KOSPI-listed companies with assets over KRW 2 trillion, with additional mandatory submission of state-run documents.
- Support will be provided for excellent English disclosure corporations, translation services, English disclosure education, and improving disclosure platforms.
- These measures aim to improve access to the Korean capital market for foreign investors, enhance their investment environment, and increase convenience for both foreign investors and domestic securities firms and listed companies.