In the future, comprehensive financial investment businesses (corporations) conducting issuance note operations must supply domestic venture capital equivalent to 25% of the procurement amount from issuance notes from their total operating assets. The current limit for real estate-related assets, set at 30%, will be reduced to 10% by 2027. The scope of corporate credit offerings for corporations will be expanded to include mergers and acquisitions (M&A) refinancing, restructuring, mid-sized corporations, and cooperative payments. Credit offerings to financial companies unrelated to corporate funding will be excluded.
On the morning of the 9th, the Financial Services Commission held a meeting with the CEOs of 10 comprehensive financial investment businesses (corporations) chaired by Chairman Kim Byeong-hwan at the Korea Financial Investment Association in Yeouido, Seoul, where it announced the 'Measures to Enhance Competitiveness of Corporate Finance in the Securities Industry.' The core of this institutional improvement is to encourage corporations to supply corporate finance (IB) and venture capital more actively in accordance with the original purpose of the system.
First, the government decided to adjust and expand corporate credit offerings for corporations. Unlike general securities companies, corporations can offer corporate credit up to 100% in addition to 100% of their equity capital (limited to credit offerings for SMEs and IB business). However, corporations have also provided credit offerings to financial companies such as lending and capital unrelated to corporate funding.
The financial authorities decided to exclude credit offerings to financial companies that are not directly related to corporate funding from the limit range. Credit offerings to special purpose companies (SPCs) will be subject to the credit offering limits according to the ultimate funding purpose. For example, credit offerings to real estate SPCs may only be included in the additional credit offering limit when accompanied by IB work.
At the same time, the financial authorities decided to expand the application of additional credit offering limits to encourage corporations to actively supply corporate funding. Since M&A is a core area of IB, additional limits can also be utilized after conducting brokerage, facilitation, or advisory services and participating in refinancing and M&A lead syndicates. Credit offerings for the improvement of financial structures and for mid-sized corporations, as well as credit offerings related to cooperative payments, will also fall under the additional credit offering limit. Koh Sang-bum, the director of the Capital Market Division of the Financial Services Commission, said, 'This aims to strengthen the participation of corporations in corporate restructuring and support functions for mid-sized and small enterprises.'
Additionally, the government decided to mandate the supply of domestic venture capital equivalent to 25% of the procurement amount from issuance notes among all operating assets of corporations. Currently, corporations with equity capital of over 4 trillion won can procure funds up to 200% of their equity capital through issuance notes with a maturity of less than one year. The procurement amount is managed with over 50% for corporate finance and under 30% for real estate. The financial authorities determined that to support innovative economic growth, it is necessary to expand the supply of venture capital and thus established the obligation to supply 25% of venture capital.
Venture capital includes funding and equity investments in small and mid-sized enterprises, debt securities rated below A, purchases of primary collateralized bond obligations (P-CBO), cooperative payments, and investments in venture capital (VC), new technology business finance companies, and high-yield funds. To ensure preparation time for corporations, the mandatory proportion of venture capital will gradually increase to 10% in 2026, 20% in 2027, and 25% in 2028.
Along with this, the financial authorities decided to gradually reduce the limit on the operation of real estate-related assets in issuance note management from the current 30% to 15% in 2026 and to 10% in 2027. They also plan to clearly define issuance notes as investment products and strengthen investor protections, such as explanation obligations.
The government stated that most of the follow-up measures for the corporate finance competitiveness enhancement plan in the securities industry are matters for enforcement decrees and regulatory amendments. The plan is to complete amendments by the end of this year after a notice in the second quarter. Some legal revisions related to the scope of corporate credit offerings will be pushed forward with a bill in the second half of the year.