After Submitting the Securities Registration Statement~Before Listing
Must Also Include Forecasts of Changes in the Business Environment
The Financial Supervisory Service (FSS) has established specific criteria for disclosing revenue and operating profit or loss up to just before listing as investment risk factors during an initial public offering (IPO). The format of the securities registration statement for investment contract securities, mainly issued by the fractional investment industry, will also be revised.
On the 22nd, the FSS announced the "Guidelines for Describing Investment Risk Factors" and the "2023 Cases of Securities Registration Statement Amendment Requests" containing these details. The FSS decided to verify whether revenue and operating profit or loss for the month immediately preceding the submission of the securities registration statement during IPO securities review are recorded in the investment risk factors section of the registration statement.
The guidelines specify that provisional monthly revenue and operating profit or loss from the month following the most recently audited quarter up to the month immediately before the initial submission date of the securities registration statement must be recorded as investment risk factors. It must also be noted as an investment risk factor that these are provisional results and that there is a possibility of differences between provisional and finalized results. Additionally, forecasts of changes in the business environment that could affect the company's financial performance from the initial submission of the registration statement until listing must be included.
Furthermore, detailed operational standards have been established, such as adding provisional results for the month before the effective date if the effective date occurs in the month following the initial submission. For example, if submitted in December last year, only provisional results up to November need to be recorded, but if the effective date is in January this year, an amended registration statement including provisional results for December must be submitted. If any content is omitted, it must be supplemented by the day before the effective date, and if there are changes, corrections can be made until the day before subscription.
The FSS also clarified the guidelines for describing investment risks related to investment contract securities, which were first issued last year. Investment contract securities are securities mainly issued by the fractional investment industry. Specifically, if the joint business operator has transactions with major shareholders or other stakeholders in asset acquisition, valuation, or custody, detailed information, internal control procedures, and decision-making methods must be specified. Subscription, allocation, and payment methods, the role and scope of account service institutions, and fees borne by investors and joint business operators must also be included as investment risk factors.
The FSS disclosed 30 cases where it requested amendments due to securities registration statements submitted by issuers lacking proper format or containing false statements or omissions. Regarding new businesses added to the articles of incorporation, such as non-fungible tokens (NFTs) and blockchain development projects, the FSS requested amendments to include detailed reasons for not pursuing the new business and future plans. For investment contract securities cases where asset-related information was not disclosed in the registration statement due to security concerns, the FSS required specific details such as the location of asset custody.
An FSS official stated, "A meeting with lead managers to facilitate smooth cooperation in IPO work is scheduled to be held next month."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
