South Korea's financial regulator is introducing a "name and shame" mechanism for securities registration statements, aimed at companies pursuing initial public offerings or rights offerings that repeatedly resubmit poorly prepared filings.
Lee Seung-woo, deputy governor of the Financial Supervisory Service, said some issuers and underwriters have failed to exercise sufficient care when drafting their initial filings, or have made inadequate revisions even after being asked to amend them, leading to repeated rounds of corrections. Lee made the remarks at a meeting with executives in charge of IPO and rights offering underwriting at 11 domestic securities firms, held at the Korea Financial Investment Association in Seoul's Yeouido district on the 28th.
"Repeated amendments not only delay a company's fundraising schedule but can also weigh on the prompt review of other filings," Lee said.
In response, the FSS will apply a tiered approach to amendment requests. For filings submitted after an initial request for correction, if a company has failed to adequately address a significant number of the key items already flagged, the regulator will send a correction request stating only that the requested changes were not sufficiently reflected. Until now, the agency had to issue correction requests running dozens of pages even for filings that were repeatedly submitted in substandard form.
The information will also be disclosed to investors through DART, the electronic disclosure system. Going forward, companies that repeatedly submit deficient filings will have disclosure notices displayed with wording such as "a request for an amended filing was made because the requested items were not sufficiently reflected" and "further correction requests may follow if the items are still not adequately addressed."
