The lead manager provides various services as prescribed below, from the date of executing underwriting agreement to the date of listing :
- Develop strong equity story and selling message for the IPO
- Conduct IPO due diligence process
- Identify and resolve any potential issue during the IPO process
- Support documentation of the listing application and other filings
- Respond to the inquiries from the exchange/regulator
- Evaluate the applicant's stock valuation
- Manage the retail/institutional investor offers and pricing process
- Devise and manage the IPO marketing plans including road shows
- Serve as the disclosure agent for two years following the listing
In Korea, the lead manager is required to serve as the disclosure agent for at least two years following the listing of a foreign issuer’s stock. The lead manager would also submit the research report on the foreign issuer. This requirement is intended to enhance the due-diligence responsibility of the lead manager and to provide accurate information to investors according to the KRX disclosure rule.
A foreign company seeking listing on the KOSPI market does not have to sign disclosure agent agreement with the lead manager when the foreign company establishes an office in Korea and hires a person responsible for disclosure, who can communicate in Korean.
- Requirements for Lead Manager
To ensure the fairness of the due diligence process by the lead manager, any financial firm which is considered to have special interest in a foreign applicant is not allowed to become a lead manager for that applicant. In addition, any financial firm in any of the following cases may not serve as a lead manager for the applicant:
- In the event the listing applicant or any affiliated person1) of the listing applicant holds 5% or more of equity securities2) of the prospective lead manager;
- fn. 1)
- an affiliated person : any of the board members, largest shareholder or affiliates of a relevant company, any board member of such affiliate, or any spouse or lineal ascendant of the foregoing
- fn. 2)
- equity securities: voting and non-voting shares, convertible bonds, bonds with warrants, exchangeable bonds, share warrants and any other securities similar thereto
- In the event the lead manager holds 5% or more of the equity securities of the listing applicant;
- In the event the lead manager and its affiliated persons collectively hold 10% or more of the equity securities of the listing applicant;
- In the event a shareholder holding 5% or more of the equity securities of the lead manager and a shareholder holding 5% or more of the equity securities of the listing applicant are the same person or where one is an affiliated person of the other (except where either one is an institutional investor);
- In the event any board member of the lead manager holds 1% or more of the equity securities of the listing applicant; or
- In the event any board member of the lead manager or the listing applicant is an affiliated person of the listing applicant or the lead manager.
- If the financial investment company is the largest shareholder of the issuer or is affiliated with the issuing company.