By Lee Dasom

New rules will allow foreign nationals from next year to directly invest in domestic stocks without needing separate accounts in Korea.

The Financial Services Commission (FSC) and its enforcement arm Financial Supervisory Service (FSS) on Nov. 27 announced guidelines for the use of integrated accounts held by foreign nationals that lifted restrictions on who can open such accounts.

The guidelines stipulate in detail the practical matters foreign investors need to know such as account opening, allocation of shareholder rights and reporting procedures.

The foreign integrated account was launched in 2017 and put under the name of an overseas financial investment company that allows foreign investors to trade and settle domestic stocks in bulk without opening separate accounts.

Yet the requirements for opening such an account were perceived as too stringent and lacking relevant guidelines, making the account difficult to use.

The FSC and FSS reflected these concerns to proactively push ahead with innovative financial services in April, granting regulatory exemptions to allow small and medium securities companies abroad to open accounts. In August, Hana Securities became the first company in Korea to open an integrated account for foreign holders.

The guidelines take effect on Jan. 2 and will be translated into English for distribution.

The FSC said, "The setting of these guidelines will greatly reduce uncertainty in the account opening and operating processes for overseas financial investment companies, thus stimulating the use of integrated accounts."

The FSC on Nov. 16 also announced forthcoming measures to improve corporate disclosure to raise global investor access to Korea's capital markets, as well as raising disclosure of information for shareholder meetings in phases from next year.

Thus from May 1, the scope of companies subject to mandatory disclosure in English will expand from those with assets of KRW 10 trillion or more to those listed on the Korea Composite Stock Price Index with assets of KRW 2 trillion or more.

dlektha0319@korea.kr