Small Public Offering Threshold Raised from 1 Billion to 3 Billion Won... VC Fund Public Offering Regulations Eased

Going forward, the criteria for small public offerings—where companies submit simplified small offering documents instead of a securities registration statement to raise funds—will be significantly relaxed.

The Financial Services Commission announced on July 21 that amendments to the Enforcement Decree of the Capital Markets Act and regulations concerning the issuance and disclosure of securities will come into effect on July 28.

The small public offering system reduces the regulatory burden for companies raising funds through public offerings by allowing them to submit and disclose small offering documents instead of a full securities registration statement when the offering is less than 1 billion won. Securities registration statements are roughly twice as lengthy as small offering documents.

Starting July 28, the threshold for small public offerings will be expanded from less than 1 billion won to less than 3 billion won. As the scope of small public offerings increases, the Financial Services Commission plans to improve disclosure templates so that investment risks are more clearly identified in the offering documents.

However, for fractional investment securities, a securities registration statement will still be required even for offerings less than 3 billion won. This measure is intended to ensure transparent disclosure of whether the initial valuation of underlying assets in the nascent fractional investment securities market has been conducted fairly.

Regulations for public offerings in the case of venture investment associations and new technology business investment associations will also be eased. These associations will now be excluded from the calculation of the number of investors subject to public offering regulations, similar to collective investment schemes. Previously, unlike banks, insurance companies, and collective investment schemes, venture investment associations and new technology business investment associations were classified as general investors—not professional investors—and were not exempt from investor headcount calculations.

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