기업금융활성화와 신종증권에 관한 자본시장법의 개정

Abstract

The Financial Services Commission of Korea published for public comments its proposed amendments ("Proposed Amendments") to the Financial Investment Services and Capital Markets Act ("Capital Markets Act") on July 27, 2011. This article reviewed the Proposed Amendments relating to the promotion of corporate finance and the introduction of new financial instruments in the following three areas. 1. Diversification of Securities Which Can Be Issued in the Capital Markets The Proposed Amendments diversified the securities which may be issued by companies listed on the Korea Exchange in two ways. First, the Proposed Amendments are designed to reflect certain amendments to the Commercial Code made in April 2011, particularly the amendments expanding the types of corporate bonds which can be issued by a Korean company. The Proposed Amendments reflecting these amendments to the Commercial Code appear appropriate but a provision requiring a dealing license for the issuance of certain derivatives embedded securities should be reconsidered from the perspective of investor protection and market integrity. Secondly, the Proposed Amendments introduced two new types of securities into the Capital Markets Act independently of the Commercial Code: company warrants and conditional capital instruments. It is desirable to expand the types of securities which can be used for or in connection with raising capital in the capital markets. However, some provisions of the Proposed Amendments such as those relating to the legal nature of the warrants for the issuance of new shares and those for the transfer of treasury shares need to be carefully reviewed and improved. Provisions relating to the acquisition and transfer of proprietary rights in shares should be included in the Capital Markets Act rather than being delegated to its Enforcement Decree. In addition, there is no reason why covered warrants should not be allowed once stock purchase warrants can be issued. As conditional capital instruments are designed to reflect the Basel III standards, it would be preferable to put the relevant provisions on such instruments in financial regulatory laws and enable banks and other financial institutions which are subject to capital adequacy rules regardless of whether they are listed rather than inserting the same in the Capital Markets Act and only permitting listed companies to issue them. 2. Improvement of Share Issuance Procedures The provisions in the Proposed Amendments relating to the procedures for new share issuance are generally appropriate and desirable for the prevention or minimization of the situation where the interests of existing shareholders are prejudiced. However, certain provisions should be reviewed and changed. Such provisions include the exemption from the proviso of Paragraph 2 of Article 418 of the Commercial Code in the case of public offering to a large number of unspecified offerees, exemption of Paragraph 4 of Article 418 of the Commercial Code both in the case of a public offering and a private placement to a specified offeree(s) and, the permission to allocate unsubscribed shares to a particular shareholder pursuant to a prior agreement between the issuing company and the shareholder. In addition, the public offering of new shares (other than rights offering to existing shareholders) should be made in principle at the market price. 3. Role of Major Gatekeepers in Capital Markets The Proposed Amendments introduced a new concept of “comprehensive financial investment services providers” which can be engaged in the provision of corporate lending, internalization of order execution and prime brokerage service to Korean hedge funds. In order to be licensed as a comprehensive financial investment service provider, certain capital requirements and risk management capabilities must be satisfied. The necessity to have a sizable securities company or investment bank provide these types of services is understandable. This article argued that it is more important to improve the competitiveness of Korean investment banks based on human capital rather than financial capital and the policy should consider such aspect. In addition, a Korean investment bank providing such services should perform its role as a gatekeeper of the capital markets to protect investors and maintain market integrity. In this regard, the provisions of the Capital Markets Act which exempt underwriters other than lead manager from securities law liability on misrepresentations contained in a registration statement should be changed. The Proposed Amendments contain detailed provisions on credit rating companies. This article reviewed the liability provision applicable to credit rating companies and pointed out the difficulties in interpreting a material misstatement or omission in a credit rating.