Listed stocks and bonds will no longer exist in a paper form in South Korea starting from Sept. 16, as the country will introduce an electronic securities system. Under the new system, the issuance, registration and circulation of securities will be performed on an electronic basis without physical certificates.
The Financial Services Commission (FSC) and the Ministry of Justice (MOJ) announced on June 18 that the enforcement decree to the Act on Electronic Registration of Stocks, Bonds, Etc. has been approved at a Cabinet meeting.
Nearly all kinds of securities will be subject to the paperless system, such as listed stocks and bonds. When the new system becomes implemented, all listed stocks and bonds will be required to be issued on an electronic basis. After they were electronically registered, the issuance of paper certificates is banned. Securities which are issued in violation of the law will not be valid.
Holders of securities can exercise their rights through the electronic registration agency’s ownership certificate and ownership notification in addition to putting their names on the stockholders’ list. It is impossible to electronically register securities which are not subject to mandatory electronic registration, such as unlisted stocks, unless issuers make a request.
The FSC is planning to make all listed securities and bonds electronic and abolish existing paper securities.
Electronic registration agencies and account management agencies, including financial companies, will operate the electronic registration system and the FSC and the Minister of Justice will jointly license electronic registration agencies. Previously, the Korea Securities Depository Corp. obtained a license to monitor the overall process of electronic registration in order to stably implement the system.