South Korea To Allow Offshore Listings

by Mary Swire, Tax-News.com, Hong Kong

24 August 2006

New rules are being drafted by the South Korean regulators to allow offshore holding companies to list on the Korean Stock Exchange.

It is thought that the new measures will help to attract large numbers of Chinese firms, following a Chinese government decree issued on August 9 which allowed offshore holding companies owning all or part of an entity incorporated in China to list shares on an overseas stock market with approval from the China Securities Regulatory Commission and Ministry of Commerce.

However, the change, which is scheduled to go into effect in late October, is also part of a strategy by the Korean bourse to attract a broad spectrum of international listings. Presently, there are no foreign companies listed on the Korea stock exchange, in contrast to other bourses in the region such as Tokyo, Singapore and Hong Kong.

"The measure will make it easier for foreign firms with difficulty in direct listing to list shares in the form of offshore holding firms," Kim Yong-hwan, a director general of the FSC, stated at a press briefing.

"In particular, the listing scheme through offshore holding companies appeals to Chinese companies seeking public offerings abroad," FSC official Kim Kun added.

The Korean FSC will also devise a new set of measures relating to disclosures and accounting to strengthen investor protection concerning foreign listings.

According to Kim Kun, between five and ten Chinese companies are preparing to list their shares on Seoul stock markets, and the first listing by a Chinese firm could take place "within this year".

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