Korea to scrap foreign investor registration in 2023
The Financial Services Commission (FSC) will scrap the foreign investor registration system this year, along with other restrictions out of line with international standards.
It said it will make revisions to the regulations hindering foreign investors from trading in the first half of this year.
The FSC made similar announcements last week, but specified on the details of the revisions and date of when they will be applied.
The revisions include ending the foreign investor registration system, making English-language regulatory reports compulsory for some Kospi-listed companies and expanding the scope of securities foreigners can trade in the over-the-counter market without filing prior reports.
The goal is to increase foreign investment, the FSC said in a statement Tuesday.
“Among the key developed nations, like the United States and Japan, there isn’t a country that runs the registration system, and key Asian countries like Hong Kong and Singapore have already selected English as the official language for filing to raise competitiveness or made it partially mandatory, like Taiwan,” the FSC said in a statement.
The FSC and Financial Supervisory Service (FSS) will revise the regulation on the foreigner registration system and over-the-counter trading by the second quarter.
Under the registration system, which was adopted in 1992, foreign investors must visit the FSC to apply for an Investment Registration Certificate. Documents have to be in Korean and a representative has to be hired if the individual cannot go in person. The process is supposed to take five days, but often takes longer.
Requiring companies to make filings in English will be revised more gradually.
Kospi-listed companies with at least 10 trillion won ($8.1 million) in assets and those with at least 30 percent foreign ownership and with asset between 2 trillion to 10 trillion won will be required to make regulatory filings in English within three days of the filing of the Korean original. The change will become effective between 2024 and 2025.
Information accessibility is “still insufficient for foreign investors” as currently it is up to the companies whether to file in English or not.
In 2022, only 13.8 percent of filings made by Kospi-listed firms was in English.
From 2026, companies with at least 2 trillion won will be subjected to the change, according to the FSC.
But the FSC remains cautious on the filings.
The biggest obstacle to making English filings mandatory was the legal responsibility companies may face caused by mistranslations, said the FSC.
“English filings will be for an investment reference. If there is an inconsistency between Korean and English reports, Korean filing will be prioritized,” the FSC added.
BY JIN MIN-JI [firstname.lastname@example.org]