Korea’s Foreign Investment Registration Certificate System will be Abolished Within This Year
t the Cabinet meeting on June 5, the Korean government passed an amendment to the 'Enforcement Decree Of The Financial Investment Services And Capital Markets Act' to abolish the Foreign Investor Registration Certificate (f-IRC) System (IRC).
The f-IRC system, which has been in place since 1992, required foreign investors to register their personal information with the Financial Supervisory Service before investing in Korea's listed securities.
The decision to abolish the f-IRC system was announced on January 25 by the Financial Services Commission and other related organizations. The aim was to improve foreign investors' access to the Korean capital market, as the registration process was seen as a significant obstacle. Unlike major markets, Korea's financial registration process was time-consuming and involved extensive documentation.
Under the revised Enforcement Decree, which is set to take effect six months after its promulgation on June 13 (scheduled for December 14, 2023), foreign investors will no longer need to register with the Financial Supervisory Service to open an account at a securities company. Instead, corporations can use the Legal Entity Identifier (LEI) and individuals can use their passport number to open accounts directly. Existing investors who have already registered will continue to use their "investment registration number" without inconvenience.
Although the f-IRC system was initially implemented to manage foreign ownership limits on listed stocks, the limit was abolished in principle in 1998, and only a small number of stocks remain subject to foreign ownership limits. After the abolition of the registration system, the total foreign investor limit and individual limits can still be managed using transaction information and separate identifiers such as the LEI for corporations and passport numbers for individuals.
The abolition of the f-IRC system is expected to improve foreign investors' access to the Korean stock market and lay the groundwork for further expansion of foreign investment. The Financial Services Commission, Financial Supervisory Service, and Korea Financial Investment Association, among other relevant organizations, will prepare practical guidelines for the abolition of the system. Additionally, other measures aimed at improving foreign investors' access to the capital market, such as expanding the scope of ex-post reporting for over-the-counter transactions and enhancing the utilization of integrated accounts, will be implemented simultaneously with the abolition of the registration system. These measures will require revisions to the Financial Investment Business Regulations and are currently in the resolution process by the Financial Services Commission.
