FSS measures effective from July 30 require standardized biotech IPO disclosures, while the FSC moves to launch cornerstone investor allocations, pre-demand forecasting and low-PBR company lists from November.
South Korea is tightening disclosure standards for pharmaceutical and biotech companies while also overhauling parts of the IPO market ahead of November 13 implementation under amended capital-markets rules. The Financial Supervisory Service on July 30 released reforms aimed at limiting promotional language such as "dream drug" and requiring more standardized disclosure of biotech IPO pricing assumptions, clinical and regulatory risks, R&D histories and technology-transfer terms. Alongside that package, the Financial Services Commission issued a legislative notice for amendments to the enforcement decree of the Capital Markets Act and the Regulations on Securities Issuance and Disclosure, with the notice period running until September 8. The FSC plans to complete subordinate rule revisions in time for the November 13 enforcement date. The IPO reforms introduce a cornerstone investor system under which institutional investors that commit to hold shares for at least six months can receive pre-allocated IPO stock. Based on the institutional tranche excluding retail, employee stock ownership association and policy-fund portions, cornerstone investors as a group can receive up to 20% on KOSPI and 30% on KOSDAQ, with individual caps of 10% and 20% respectively. Authorities said the mechanism is intended to reduce the post-listing sell-off pressure often blamed for the so-called "IPO massacre." Lock-ups for cornerstone allocations will be staggered to avoid a single expiry date concentrating selling pressure: 50% of allocated shares will be locked up for six months, 30% for eight months and 20% for 10 months. Conflict-of-interest protections bar agreements with parties such as major shareholders or related parties, and prohibit money or transactional benefits tied to the arrangement. The FSC is also introducing pre-demand forecasting, allowing underwriters to test institutional appetite on price and volume before filing a securities registration statement and setting the indicative price band. Eligible participants must satisfy asset thresholds, including at least 30 billion won in entrusted assets for general private equity fund managers and discretionary investment managers, while due-diligence, non-disclosure and record-keeping requirements are being tightened to protect material non-public information. Separately, the FSC plans from November to publish lists of listed companies with persistently low price-to-book ratios. The disclosure will cover companies whose PBR stays in the bottom 25% of KOSPI or bottom 10% of KOSDAQ for three consecutive years, with publication twice a year in May and November on securities firms' websites and the exchange disclosure portal. Companies that publish a corporate value enhancement plan will receive a one-year exemption from inclusion.