Financial Services Commission to Establish Mandatory Lock-up Period Rules for Institutional Investors in IPOs

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From now on, institutional investors will not be allowed to sell their shares on the day of an Initial Public Offering (IPO). Like major shareholders, they will be subject to a mandatory holding period. Additionally, the criteria for delisting will be relaxed compared to the current standards to naturally facilitate the exit of zombie companies from the market.

On the afternoon of the 8th, the Financial Services Commission announced these details as part of the '2025 Economic Sector 1 Major Issue Resolution Meeting.'

Specifically, regarding capital market policies, efforts will continue this year to improve the structure of the Korean stock market under the theme of 'capital market advancement.' First, to enhance the qualitative level of the listing market, the rationality of the IPO offering price will be improved, and the requirements and procedures for delisting will be strengthened.

Regarding IPO system improvements, a plan to introduce a mandatory holding period for institutional investors is highly likely. This is because there have been criticisms that institutional investors exit on the day of listing in the IPO market, which is considered unfair. Along with this, the method of calculating the offering price will also be rationally improved.

A Financial Services Commission official said, "Currently, in the Korean IPO market, there is criticism that institutional investors tend to engage in short-term trading instead of responsibly investing in companies," adding, "We are considering these issues."

Furthermore, the delisting criteria will be relaxed compared to the current standards to facilitate the exit of zombie companies. One representative measure under review is changing the market capitalization criteria.

Currently, in the KOSPI market, if a company designated as a management item has a market capitalization below 5 billion KRW for 90 days and this situation continues for 30 days, it becomes subject to delisting. In the KOSDAQ market, if a company designated as a management item has a market capitalization below 4 billion KRW for 90 days, and this condition persists for 10 consecutive days or a cumulative total of 30 days, it becomes subject to delisting.

The Financial Services Commission is preparing other measures related to the relaxation of delisting criteria and plans to announce the delisting criteria relaxation measures by February at the latest. Through these measures, the commission aims to transform the structure of the domestic stock market and encourage market participation by institutional and foreign investors.

For foreign investors, the second phase of mandatory English disclosure is also being prepared. This will be implemented from 2026 to improve the investment environment for foreign investors in Korea. Additionally, the commission plans to support active shareholder rights exercise through improvements in proxy voting solicitation systems, executive compensation disclosure, and stewardship code operations.

Meanwhile, as in the previous year, the Financial Services Commission will steadfastly pursue corporate value-up program policies and corporate governance improvement measures this year. The corporate value-up program will focus on tax support measures. Regarding corporate governance improvement measures, the approach has shifted from amending the Commercial Act to amending the Capital Markets Act. The commission stated that it will again seek the cooperation of the National Assembly this year to pass the legislation.

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