South Korea's Financial Services Commission has proposed subordinate rules for new initial public offering arrangements that will permit underwriters to assess institutional demand before filing a securities registration statement and allow advance allocations to cornerstone investors. The framework is intended to inform indicative price ranges earlier and secure institutional investors willing to hold allocated shares for an extended period. General private fund managers and discretionary investment managers participating in pre-filing demand assessments would need at least KRW 30 billion in entrusted assets, alongside valuation and confidential-information controls. Underwriters must complete due diligence, enter confidentiality agreements with participants and retain records of information provided. Cornerstone investors would also need capital or entrusted assets equal to at least 20 times their advance subscription. Of their allocations, 50% would be locked up for six months, 30% for eight months and 20% for 10 months. Cornerstone allocations from the remaining institutional pool would be capped at 20% in aggregate and 10% per investor for KOSPI offerings, rising to 30% and 20%, respectively, for KOSDAQ offerings. Contracts with major shareholders, related parties and other interested institutions would be prohibited, as would direct or indirect benefits tied to a cornerstone agreement. The consultation closes Sept. 8, with the amendments scheduled for completion when the revised Capital Markets Act takes effect Nov. 13, 2026.

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