South Korea Introduces Cornerstone Investor Lock-up Mechanism to Curb IPO Sell-off Wave

The Financial Services Commission of South Korea will introduce a cornerstone investor system to curb significant declines in stock prices following initial public offerings (IPOs). Under the new system, institutional investors who commit to locking up their shares for at least six months will be allowed to receive stock allocations in advance. The relevant rules will take effect on November 13 and will be implemented alongside amendments to the Capital Markets Act. The Commission stated that introducing stable, long-term institutional buyers will help enhance investor confidence in IPOs and alleviate the issue of holders rushing to sell, which leads to price declines.

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