Guidelines for Foreign Investor Omnibus Account

A foreign investor omnibus account lets a foreign financial investment company place and settle Korean stock trades for many of its own clients through a single account in its own name — an exception to the rule that a trading account is opened in the name of the beneficial owner. These Guidelines set out how such an account is opened, who may hold one, what the agreement with the Korean broker must contain, what is verified, what may not be traded, and what is reported to whom. They are the work of the Financial Services Commission, the Financial Supervisory Service, the Korea Financial Investment Association and the Korea Securities Depository, and those four bodies published this English edition themselves. It is reproduced here without alteration. This is not a translation by H&S Partners, and nothing in the document has been edited, abridged or re-typeset.

What's inside

• Opening the account, and who may hold one — the account-opening sequence, the special exception that lets the account be opened in the name of the foreign financial investment company rather than the beneficial owner, how licence status is verified, and the limitation of ultimate investors to individuals, corporates and funds
• What the agreement with the Korean broker must say — the four matters that must be expressly included, among them the obligation to submit transaction details and per-investor identification numbers to the Korean financial authorities on request, and the consequences of failing to do so
• Verification, and the exemption from it — the customer, beneficial-owner and sanctions verification required under the Act on Reporting and Using Specified Financial Transaction Information, and the four conditions on which a Korean broker is exempt from verifying the beneficial owners of the ultimate investors — including the FATF mutual-evaluation condition and the FIU's own interpretation on the look-back period
• What cannot be traded through the account — only listed shares are eligible; short selling is barred, and purchase orders for shares subject to the foreign investor per-investor acquisition limit must be rejected, with the reasons the authorities give for each
• Reporting — ongoing and quarterly — FIMS reporting of the account holder's trades, ten-year retention of ultimate-investor records, the 10th-day and 15th-day quarterly deadlines, the prescribed reporting table, and the encrypted investor identification codes that may stand in for real names, with the notice and consent that must be obtained from the ultimate investors first
• Rights, tax and internal control — voting through the standing agent and the KSD including non-uniform exercise under the Commercial Act, bulk allocation of other rights, withholding at non-resident rates with the treaty correction route, and the pre- and post-verification the Korean broker must perform, including on-site due diligence and compliance officer review

How the document is arranged