Korea Approves IPO Cornerstone-Investor Rules for a 13 November Start
Summary
Korea’s Cabinet approved implementing-decree amendments on 3 November for IPO pre-marketing and a new cornerstone-investor regime scheduled to take effect on 13 November. Eligible institutions may receive advance allocations subject to staggered lock-ups, allocation caps and conflict safeguards. The approval establishes the operating rules; it does not show that any IPO has used them.
- The Cabinet approved the implementing-decree amendments on 3 November. The Financial Services Commission said promulgation would follow in November and the regime is scheduled to take effect on 13 November; this is approved rulemaking rather than evidence of an executed IPO allocation.
- For a cornerstone allocation, 50% of the allotted shares must be locked up for six months, 30% for eight months and 20% for ten months. The aggregate and single-investor caps are 20% and 10% of the ordinary institutional allocation for KOSPI IPOs, and 30% and 20% for KOSDAQ IPOs.
- A cornerstone investor must satisfy the pre-marketing eligibility requirements and hold capital or managed assets at least 20 times the amount subscribed. Related parties are barred from cornerstone contracts, and direct or indirect side benefits tied to an allocation are prohibited.
The Cabinet has approved the implementing-decree amendments, which the Financial Services Commission said will be promulgated in November and take effect with the amended Capital Markets Act on 13 November 2026. As of this publication date, the regime is approved but not yet effective, and no completed cornerstone allocation is reported.
Analysis
On 3 November 2026, Korea’s Cabinet approved amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act that set operating rules for IPO pre-marketing and cornerstone investors. The Financial Services Commission said the decree would be promulgated in November and take effect alongside the amended Act on 13 November 2026. The approval completes a material rulemaking step, but the regime was not yet effective on this article’s 5 November publication date.
The pre-marketing framework allows an underwriter to test eligible institutional demand before the securities registration statement fixes the indicative price range. The underwriter must first prepare its due-diligence report. Information provided must be information expected to appear in the later filing, and the parties must enter into a confidentiality agreement while recording when, to whom and what information was supplied.
The cornerstone framework permits part of the ordinary institutional allocation to be assigned in advance to eligible institutions that accept holding restrictions. The Financial Services Commission set staggered lock-ups: 50% of the allocation for six months, 30% for eight months and 20% for ten months. These are mandatory holding periods attached to the allocation, not a statement about expected investment performance.
Allocation ceilings differ by market. For KOSPI IPOs, cornerstone investors in aggregate may receive up to 20% of the ordinary institutional allocation and one investor up to 10%. For KOSDAQ IPOs, the corresponding ceilings are 30% and 20%. The regulator’s conversion table indicates that the aggregate ceilings equal 10% of the full KOSPI offering and approximately 4.5% to 10.5% of the full KOSDAQ offering, depending on the allocation structure.
Eligibility is conditional. In addition to the pre-marketing standards, a cornerstone investor must have capital or managed assets at least 20 times its proposed subscription amount. The rules also prohibit cornerstone contracts with interested parties such as a major shareholder or related person and prohibit direct or indirect exchanges of benefits tied to an advance allocation. These safeguards establish regulatory boundaries; they do not determine whether a particular domestic or overseas institution qualifies.
For overseas GPs, LPs and strategic investors, the regime may provide a new reference point for assessing Korean IPO price formation, anchor demand and post-listing liquidity. In our analysis, its practical significance will depend on which issuers use it, the size and identity of actual cornerstone allocations, and how investors price the required holding periods. The announcement does not grant participation rights, confirm access for any investor or replace transaction-specific legal and regulatory review.
Why it matters
The rules create a formal path for issuers and underwriters to test institutional demand earlier and secure longer-hold anchor allocations. For international investors, the relevant change is the structure of future Korean IPO processes; the first evidence of market impact will come only after eligible deals use the regime and publish transaction-specific terms.
Questions for further review
- Does a prospective institution meet the applicable professional-investor, scale, track-record and information-control requirements for the specific IPO?
- How do the staggered lock-ups, allocation caps and valuation terms affect liquidity, concentration and exit assumptions for a proposed cornerstone position?
- Which IPOs actually use the regime after 13 November, and what do their filings disclose about cornerstone allocations, pricing and related-party safeguards?