FSC eases regulation on financial firms' FDI

Financial Services Commission (FSC) chief Koh Seung-beom speaks during a press conference held on Oct. 26 at the government complex in Seoul. Yonhap

By Anna J. Park

The government is set to revise the country's financial law to ease regulations and procedural pressures on financial companies' overseas advancement.

The Financial Services Commission (FSC), the country's top financial policy regulator, said the move came as the total size of Korea-headquartered financial companies' foreign direct investment (FDI) tripled during the past five years.

FDI refers to when a financial firm either acquires more than 10 percent of a foreign-headquartered entity or sets up a regional office overseas.

While the domestic financial companies' expansion into overseas markets has been on a growth trajectory over the last couple of years, the current regulation obligates financial firms to follow strict procedures, hindering efficient management of overseas business activities.

The revision led by the FSC will eliminate financial companies' obligation to conduct a compulsory prior notification reporting when it comes to foreign investments worth less than $20 million.

In the case of directly acquiring stakes of a foreign entity, financial companies are not obligated to give prior notification in acquisition deals under $30 million. Also, documentation required for such FDIs has been curtailed.

Instead, firms can report to the authorities within a month after such investments are made. In addition, when it comes to investing in overseas fund products, financial companies no longer need to report changes to their invested stakes, as long as there's no increase in the investment amount.

The revisions are set to be confirmed by this year at the earliest, following a two-week period of notifications on the change in regulations in mid-November.