Participation Rate in Electronic Securities System for Unlisted Companies Rises by 4.4%P
IPO Schedule Shortened by 5 Days, Stock Rights Exercise Period Reduced by 1-4 Days
Economic Benefits Including Approximately 13 Billion Won Annual Savings in Physical Stock Certificate Issuance Costs
[Asia Economy Reporter Oh Ju-yeon] The electronic securities system, fully implemented on September 16 last year, is being evaluated as having stably settled in the capital market and laid the foundation for market innovation.
On the 16th, the Korea Securities Depository (KSD) marked the first anniversary of the full implementation of the electronic securities system, evaluating that it improved various inefficiencies caused by the existence of physical securities and established a foundation for fair economy in the capital market and capital market innovation.
As of August 31, the electronic registration administrator assets (balance) amounted to 510.1 trillion KRW, an increase of about 32.1 trillion KRW compared to the system implementation date (478 trillion KRW). The total number of issuing companies (stocks) using the electronic securities system is 2,588, and the unreturned listed shares (physical certificates) of listed companies subject to mandatory application of the electronic securities system decreased by 35%.
Participation of unlisted companies in the electronic securities system has also expanded. The number of unlisted companies was 97 at the time of system implementation, and since the introduction of the system, a cumulative total of 337 companies have participated in the electronic securities system, with the participation rate increasing from 4.0% to 8.4%.
From the issuer's perspective, the efficiency and stability of shareholder management tasks have improved. Since the system's introduction, a total of 733 issuing companies have prepared 1,140 quarterly owner statements (excluding regular and extraordinary general meetings) and are utilizing them for shareholder management.
A major achievement of the electronic securities system introduction is the reduction of about five days previously required for the issuance and delivery procedures of physical certificates during the initial public offering (IPO) schedule. The period from the record date for shareholders' meetings and stock rights exercise to the notification of the owner statement has been shortened by about 1 to 4 days. Calculating the financial opportunity cost due to this schedule reduction, a cost-saving effect of approximately 5 billion KRW was confirmed over the past year.
The estimated cost of about 13 billion KRW that would have been incurred if newly electronically registered stocks over the past year were issued physically can also be classified as an economic effect of the electronic securities system introduction. Furthermore, the introduction of the electronic securities system has fundamentally blocked the possibility of lost certificates, and the economic effect of preventing losses and damages related to lost certificates is estimated to be about 7 billion KRW annually.
Going forward, the KSD plans to actively promote the expansion of the electronic securities system usage through continuous incentives for unlisted companies and system improvements as the electronic registration institution.
In particular, to minimize procedural burdens arising from the introduction of the electronic securities system, the KSD will identify demands for system improvements such as easing the one-month public notice and notification period for issuers' conversion to electronic securities and propose them to policy authorities. It also plans to implement "visiting services" (system briefings, on-site consulting, etc.), support amendments to articles of incorporation, and prepare non-face-to-face support methods (online educational content, etc.). Additionally, incentives such as exemption of stock issuance registration fees and electronic voting/proxy fees, and a 20% reduction in basic securities agency fees will continue to be provided.
The KSD stated, "We will actively cooperate with the government to improve the system and infrastructure in preparation for the mandatory electronic registration of unlisted companies, thereby contributing to the efficiency of the capital market."
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