South Korea's Financial Services Commission (FSC) passed a Capital Markets Act amendment on May 21 that raises the small public offering threshold from 10 billion KRW to 30 billion KRW, the first increase since the 2009 baseline. The regulatory change aims to lower fundraising barriers for small and medium-sized enterprises and venture companies by allowing simplified disclosure filings instead of full securities registration statements for offerings below the new cap. The amendment responds to market growth—public offering volume expanded from 127 trillion KRW in 2009 to a recent three-year average of 274 trillion KRW, while per-case capital increase sizes grew 3.8-fold over the same period. The FSC stated the revision will enable smoother capital access for SMEs and venture firms without compromising investor protection.
FSC Raises Small Public Offering Threshold to 30 Billion KRW
Under the prior framework, companies raising less than 10 billion KRW annually could file simplified small-offering disclosure documents instead of full securities registration statements. The simplified format is half the length of standard filings and bypasses FSC review procedures, accelerating fundraising timelines. The 10 billion KRW cap remained unchanged since 2009 despite real economy and capital market expansion. The FSC confirmed the new 30 billion KRW threshold will take effect around May 28 alongside related regulatory revisions.
VC Fund General Partners Excluded from Investor Count Rule
The amendment resolves unintended public offering violations for venture capital funds. Existing rules classified offerings to 50 or more general investors as public offerings subject to mandatory securities registration. Financial institutions such as banks and funds qualified as professionals exempt from the 50-investor count, but venture investment partnerships and new-technology business investment partnerships were treated as general investors. This caused venture companies receiving investments from multiple VC funds to inadvertently exceed the 50-investor threshold when all limited partners across funds were aggregated. The FSC now recognizes the professional expertise of VC fund general partners (GPs) managing venture investment partnerships and new-technology business investment partnerships, excluding these entities entirely from investor count calculations.
FSC Adds Disclosure Requirements for Fractional Investment Securities
The FSC introduced investor protection measures alongside the threshold increase. Disclosure formats will highlight risk factors for companies under special supervision or watch status. Fractional investment securities—beneficiary certificates in non-monetary trusts—must file full securities registration statements even when offering amounts fall below 30 billion KRW, given the non-standardized nature and diversity of underlying assets. The FSC stated the combined measures will facilitate flexible VC fund structuring while allowing venture companies to accept investments without regulatory compliance concerns.
FAQ
What did South Korea's FSC do on May 21?
The FSC passed a Capital Markets Act amendment raising the small public offering threshold from 10 billion KRW to 30 billion KRW and relaxing venture capital fund public offering regulations.
Why did the FSC raise the small offering threshold?
The 10 billion KRW cap remained unchanged since 2009 while public offering market volume grew from 127 trillion KRW to 274 trillion KRW on a three-year average basis and per-case capital increase sizes expanded 3.8-fold, reducing the threshold's practical utility for SME fundraising.
