1. Disclosure requirements
In the preparation and disclosure of an investment prospectus, Art. 123 of the Financial Investment Service and Capital Market Act (FSCMA) states that:11
When an issuer publicly offers or sells securities in accordance with Article 119, the issuer shall file an investment prospectus (hereinafter referred to as “investment prospectus”), prepared in accordance with the manner prescribed by Presidential Decree, with the Financial Services Commission (FSC) on the day on which the relevant registration statement becomes effective (or the day on which the supplements to a universal shelf registration statement are filed, in cases where the supplements to the universal shelf registration statement shall be field in accordance with Article 119 (2) and keep it at a place specified by Ordinance of the Prime Minister to make it available to the public for inspection.
<Amended by Act No. 8863, Feb. 29, 2008>
No investment prospectus shall contain any description different from the one described in the relevant registration statement (including any supplements to a universal shelf registration statement under Article 119 (2); hereafter the same shall apply in this Chapter) or omit any description stated therein: Provided, that a description of the balance between confidentiality in corporate management, etc. and protection of investors, etc., as prescribed further by Presidential Decree.
An issuer of the collective investment securities specified by Presidential Decree shall file an additional investment prospectus separately from the one under paragraph (1) in accordance with the following subparagraphs, with the Financial Services Commission (FSC), and shall keep it at a place specified by Ordinance of the Prime Minister to make it available to the public for inspection: Provided, that such filling, keeping, and disclosure
11 Chapter I, Part III of the Financial Investment Service and Capital Market Act.
II. Primary and Secondary Market-Related
Regulatory Framework
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may be omitted, if offering or selling such collective investment securities is discounted:
<Amended by Act No. 8863, Feb. 29, 2008>
A revised investment prospectus shall be filed at least once after the investment prospectus under paragraph (1) is filed within an interval prescribed by Ordinance of the Prime Minister; and
In cases where an amendment to registration is filed in accordance with Article 182 (8), an investment prospectus in which such amendment is reflected shall be filed within five days after a notice of amended registration is delivered.
2. Credit Rating Requirements
Regulation 11 of the Regulations on Securities Underwriting Business provides for the credit rating requirements of non-guaranteed bonds. Chapter III of the regulation states that:12
In the case of an underwriter underwriting non-guaranteed bonds, such bonds shall be those that have been rated by at least two (one agency, in the case of underwriting ABS issued in the form of bonds pursuant to the Act on ABS or in inevitable cases such as the business suspension of credit rating agencies) credit rating agencies from among those approved for the credit ratings business pursuant to the provisions of the Act on Use and Protection of Credit Information.
However, non-guaranteed bonds issued by foreign corporations, etc., shall be deemed as those rated in accordance with this provision if they are rated by two or more credit rating agencies (referring to international credit rating agencies as prescribed by the Governor of the Financial Services Commission (FSC) in the Item of [§2-11(2)1] of the FSC’s Regulations on Securities Issuance and Disclosure; the same hereinafter in this chapter).
3. Lead Time for Registration Approval
The minimum lead time (number of business days) for registration approval is provided for in Art. 120 of the FSCMA, which states that:13
The registration of securities under Article 119 (1) and (2) (hereinafter referred to as “securities registration”) shall be effective on the day after the expiration of the time period prescribed by Ordinance of the Prime Minister, considering the type of securities or the characteristics of the transaction, etc., which shall begin on the day on which the registration statement is submitted and accepted by the Financial Services Commission.
<Amended by Act No. 8863, Feb. 29, 2008>
The Financial Services Commission (FSC) shall not refuse to approve a registration statement, unless it is not prepared in conformity with the
12 Regulation 11 on Underwriting of Non-Guaranteed Bonds, Chapter III of the Regulations on Securities Underwriting Business.
13 Footnote 12, Art.120 on “Effective Date of Registration Statement, etc.”
prescribed form of the registration statement, there is any false description or representation in the registration statement concerning a material fact, or any description or representation of a material fact is omitted.
<Amended by Act No. 8863, Feb. 29, 2008>
The effectiveness under paragraph (1) shall not include any effect of acknowledging that the descriptions of the relevant registration statement are true or correct, or the Government’s assurance or approval of the value of the securities.
An issuer of securities shall, when it intends to withdraw its securities registration, file a withdrawal statement with the Financial Service Commission (FSC) no later than the day before the date set for offering to acquire or purchase the securities stated in the relevant registration statement.
<Amended by Act No. 8863, Feb. 29, 2008>
4. Availability of Shelf Registration and Associated Documentation Requirements
If the bond issuer uses the shelf registration, the bond issuer must submit the
“universal shelf registration statement” to the Financial Services Commission (FSC).
The legal provision for shelf registration is stipulated at Art. 119 (2) in FSCMA, which states that:14
When a registration statement for a total amount of securities to be publicly offered en bloc over a certain period of time (hereinafter referred to as
“universal shelf registration statement”) in accordance with the guidelines and methods prescribed by Presidential Decree, considering the type of securities, scheduled issue period, frequency of issuance, requirements for the issuer, etc., is submitted to and accepted accordingly by the Financial Services Commission (FSC), such securities may be publicly offered or sold without necessarily submitting a registration statement each time such securities are publicly offered or sold during the period of time stated therein, notwithstanding paragraph (1).
In such cases, the documents related to the universal shelf registration statement (hereinafter referred to as “supplements to universal shelf registration statement”), as prescribed by Presidential Decree, shall be submitted each time such securities (excluding collective investment securities, specified by Presidential Decree) are publicly offered or sold.
<Amended by Act No. 8863, Feb. 29, 2008>
5. Regulated Suspension Period
The maximum regulated suspension period is 6 months. The suspension period is imposed by the Financial Supervisory Service (FSS), if some financial investment institutions violate the regulation or the FSCMA.
14 Footnote 12, Art. 119 (2) on “Registration of Public Offering and Sale.”
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