South Korea’s Financial Services Commission announced Cabinet approval of amendments to the Financial Investment Services and Capital Markets Act’s enforcement decree covering preliminary book building and cornerstone investors in initial public offerings (IPOs). Following the July consultation, the amendments are scheduled to take effect Nov. 13, 2026. Underwriters will be able to assess institutional demand before filing a securities registration statement, allowing that demand to inform the initial price band. They must first complete a due diligence report, conclude confidentiality agreements and retain records of information disclosures. General private fund managers and discretionary investment managers must have at least KRW 30 billion in entrusted assets. The reduced KRW 5 billion threshold available in ordinary book building after two years of registration will not apply. The cornerstone framework permits advance allocations from the general institutional tranche in exchange for mandatory holding periods. Investors must meet the preliminary book building eligibility criteria and hold equity or entrusted assets, depending on the source of their investment funds, worth at least 20 times their advance subscription. Detailed implementing rules provide for holding 50% of allocated shares for six months, 30% for eight months and 20% for 10 months, staggering expiry dates to limit concentrated selling. Collective allocations and individual investor allocations are capped at 20% and 10%, respectively, on KOSPI, compared with 30% and 20% on KOSDAQ. These percentages apply to general institutional allotments, excluding tranches reserved for retail investors, employees and policy funds. Related institutional investors, including major shareholders and related parties, cannot enter cornerstone agreements. Direct or indirect exchanges of benefits conditional on such agreements are also prohibited.
South Korea's Financial Services Commission announces Cabinet approval of rules for preliminary IPO book building and cornerstone investors
South Korea’s Financial Services Commission reported Cabinet approval of rules enabling preliminary IPO book building and advance allocations to cornerstone investors, scheduled to take effect Nov. 13, 2026. The framework combines eligibility and confidentiality safeguards with staggered cornerstone holding periods of six, eight and 10 months. Aggregate cornerstone allocations are capped at 20% of general institutional allotments on KOSPI and 30% on KOSDAQ, alongside individual investor limits and conflict safeguards.