Regulatory corrections regarding capital increases by listed companies have surged this year, as many firms pursue capital increases with unclear plans for fund usage. The Financial Supervisory Service (FSS) has tightened its review standards, leading to an increase in cases where companies withdraw their capital increase plans.
As of August, the FSS has issued 66 correction requests for securities registration statements, significantly surpassing last year's total of 43 and 56 in 2024.
Specifically, among 15 listed companies that submitted securities registration statements for capital increases in the third quarter but have yet to finalize issuance conditions, six received two to four correction requests from the FSS, while seven received one request. Only two companies did not receive any correction requests. Companies that finalized their issuance conditions this month also made multiple corrections. Clobot submitted six corrections to its securities registration statement, while SensorView submitted three. Some, like SomeAge, made four corrections but ultimately withdrew their capital increase decision on August 5.
The trend of withdrawing capital increases has also increased compared to previous years. As of August 26, there have been 23 cases of capital increase withdrawals through corrections, including four from KOSPI and 19 from KOSDAQ. This already exceeds the total of 22 withdrawals (three from KOSPI and 19 from KOSDAQ) that occurred throughout the last year.
Correction requests are a procedure by which the FSS asks companies to supplement important information included in their securities registration statements. If the FSS determines that significant matters affecting investor judgment are insufficiently explained or require additional information, it will issue a correction request.
The increase in correction requests indicates a growing concern over 'poor capital increases.' There are numerous cases where companies have unclear plans for how they will use the funds raised through capital increases, including instances where the funds are used to pay down debts of affiliated companies.
A source in the financial investment industry stated, "Since capital increases dilute the value of existing shareholders' stakes, it is crucial to verify how the funds raised will be used. Given that there are capital increases with unclear purposes, the regulatory atmosphere is that simply needing funds is not a sufficient reason to allow capital increases."
* This article has been translated by AI.
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