{"content_id":"kyjivykuze","slug":"ipo-subscription-deposit-refund-interest-korea","locale":"en","schema_type":"Article","category":"trends","category_name":"Trends","title":"Proposal for Interest on Refunded IPO Subscription Deposits: Calculation and Issues to Review","summary":"Financial authorities are reportedly considering a proposal to pay interest on subscription deposits refunded when investors do not receive IPO share allocations. Whether the proposal will be implemented, as well as the interest rate and calculation period, has not been finalized, so any estimated interest should be viewed as a scenario.","author":{"name":"Injoys Editorial Team","url":"https://injoys.com/ko/about"},"key_points":["An IPO subscription deposit is an amount paid in advance to a securities firm when applying for public offering shares. The standard deposit rate is 50% of the offering price, but it may vary by stock.","The proposal centers on paying interest for the holding period on deposits returned to investors after deducting the payment for allocated shares.","The interest rate, amount subject to calculation, start and end dates, inclusion of weekends, and treatment of taxes and costs have not yet been finalized.","Applying an annual rate of 1% and an average period of 3 days to annual subscription deposits of 450 trillion won would theoretically yield about 37 billion won, but this is a simple scenario, not a confirmed payment amount.","IPO subscription loan costs may exceed the expected refund interest, so investors should not increase their subscription amounts solely because interest payments may be introduced."],"content_markdown":"A proposal is under consideration to pay interest on the portion of IPO subscription deposits that is returned because it is not used to pay for shares. The direction currently known is intended to return some of the economic benefit generated while investors cannot use their funds for several days.\n\nHowever, whether the system will be introduced, when it will take effect, the applicable interest rate, and the interest calculation period have not been finalized. The calculations below are examples intended to explain the structure of the system and do not represent actual payment amounts.\n\n## What Is an IPO Subscription Deposit?\n\nAn IPO subscription deposit is money that an investor pays in advance to the lead securities firm when subscribing for shares of a company newly listed through an initial public offering. It serves a role similar to a security deposit that guarantees contractual performance.\n\nIn a typical IPO subscription, 50% of the subscription amount is required as a deposit, but the deposit rate may vary depending on the stock and subscription terms. The exact terms should be checked in the company’s securities registration statement, prospectus, and the securities firm’s subscription guidance.\n\n### Basic Calculation Example\n\nAssume an investor applies for 100 shares priced at KRW 10,000 each, with a deposit rate of 50%.\n\n| Item | Calculation | Amount |\n|---|---:|---:|\n| Subscription amount | KRW 10,000 × 100 shares | KRW 1 million |\n| Required deposit | KRW 1 million × 50% | KRW 500,000 |\n| Payment due when 2 shares are actually allocated | KRW 10,000 × 2 shares | KRW 20,000 |\n| Simple refund amount | KRW 500,000 − KRW 20,000 | KRW 480,000 |\n\nThe actual settlement method may reflect fees and terms specific to each securities firm.\n\n## Why Refund Interest Is Being Discussed\n\nWhen IPO competition rates are high, investors receive far fewer shares than they applied for. Unused deposits are returned after the subscription and allocation procedures are completed, but during that period, investors generally cannot withdraw the funds or use them for other investments. If weekends or public holidays fall within the period, the perceived waiting time may be longer.\n\nInvestor deposits are managed separately from securities firms’ proprietary assets to protect investors. Securities firms must separately deposit or place the funds in trust with a depository institution in accordance with applicable laws and regulations. The relationship between investment income generated in this process and deposit usage fees paid to investors varies depending on the product and account terms.\n\nThe refund interest system is an approach intended to distribute to subscribers the economic benefit generated by holding funds that are ultimately not used for IPO shares for a certain period. Compared with the existing general practice of refunding only the principal, this could be a change favorable to investors.\n\n## Difference Between Equal and Proportional Allocation\n\nShares offered to retail subscribers are allocated through equal allocation and proportional allocation. The specific allocation ratios and calculation methods should be checked in the prospectus for each IPO.\n\n| Category | Core principle | Effect of deposit | Points to note |\n|---|---|---|---|\n| Equal allocation | Allocation based on the number of subscribers who meet certain requirements | Once the minimum subscription quantity is met, additional deposits have limited effect | If there are many applicants, a lottery may be used, so even 1 share is not guaranteed |\n| Proportional allocation | Allocation in proportion to the subscription quantity and competition rate | A larger deposit increases the number of shares that may be allocated | If the competition rate is high, even a large deposit may result in only a few shares |\n\nIn particular, proportional-allocation subscribers may pay deposits of tens of millions or hundreds of millions of won. If the actual allocation amount is small, most of the deposit will be subject to refund, so these subscribers may be relatively more affected by the refund interest system.\n\n## How to Calculate Estimated Refund Interest\n\nAlthough the final rules have not been determined, a simple daily prorated calculation can be expressed as follows.\n\n**Estimated interest = Refund amount subject to interest × Annual interest rate × Number of recognized days ÷ 365**\n\nFor example, if the refundable amount is KRW 400 million, the annual interest rate is 2%, and the recognized period is 3 days, the simple pre-tax interest is as follows.\n\n- KRW 400 million × 2% × 3 ÷ 365\n- Approximately KRW 65,753\n\nUnder the same conditions, the result will change if the period or interest rate changes.\n\n| Refund amount | Annual interest rate | Recognized period | Simple calculated interest |\n|---:|---:|---:|---:|\n| KRW 10 million | 1% | 3 days | Approximately KRW 822 |\n| KRW 100 million | 1% | 3 days | Approximately KRW 8,219 |\n| KRW 400 million | 1% | 3 days | Approximately KRW 32,877 |\n| KRW 400 million | 2% | 3 days | Approximately KRW 65,753 |\n| KRW 400 million | 2% | 5 days | Approximately KRW 109,589 |\n\nThe amounts in the table are examples that do not reflect taxes, fees, rounding to the nearest won, or the actual applicable standards.\n\n## How Should the Assumption of KRW 450 Trillion Annually Be Interpreted?\n\nAssuming that total annual IPO subscription deposits amount to KRW 450 trillion and that an annual rate of 1% applies to all funds for an average of 3 days, the calculation is as follows.\n\n**KRW 450 trillion × 1% × 3 ÷ 365 = Approximately KRW 37 billion**\n\nThis figure is an arithmetic scenario intended to estimate the scale of the system. It is not equal to the amount that investors would actually receive for the following reasons.\n\n- KRW 450 trillion is a flow figure representing the combined subscription deposits for multiple IPOs, not the balance at a single point in time.\n- Only the final refund amount, rather than the entire deposit, may be subject to calculation.\n- Refund schedules and fund-holding periods vary by stock.\n- The actual applicable interest rate may differ from 1% annually.\n- Securities firm costs, taxes, and standards for truncating amounts below KRW 1 may be reflected.\n- Even if the system is implemented, it may apply only to subscriptions made after the effective date.\n\nTherefore, approximately KRW 37 billion is not a confirmed source of funds or payment forecast, but a theoretical total based on the stated assumptions.\n\n## Key Issues That Have Not Yet Been Decided\n\n### 1. What Amount Will Be Used as the Basis for Calculation?\n\nIt must be determined whether interest will be calculated on the entire subscription deposit or only on the net refund amount after deducting the payment for allocated shares. Considering the purpose of the system, the refund amount is likely to be the focus, but the final rules must be checked.\n\n### 2. When Does the Interest Calculation Period Begin and End?\n\nThe amount will vary depending on whether interest is calculated from the time the subscription deposit is paid until the refund is processed, or from the subscription closing date. A method is also needed for handling cases in which payment times differ.\n\n### 3. Are Weekends and Public Holidays Included?\n\nWeekends and public holidays would be included if calendar days are used, but they may be excluded if business days are used. This issue could create a significant difference for IPOs that occur around extended holidays.\n\n### 4. Who Determines the Interest Rate?\n\nIt has not been decided whether the government will announce a single interest rate or whether securities firms will independently set their rates under consistent calculation principles. If rates vary by securities firm, investors will need to compare not only subscription fees but also refund interest terms.\n\n### 5. How Will Taxes and Costs Be Handled?\n\nDetailed standards are needed regarding how refund interest will be classified under income tax law, whether it will be subject to withholding tax, and whether securities firms may deduct administrative costs.\n\n## Items Investors Should Check\n\nIf the system is actually implemented, investors should check the following before subscribing.\n\n1. The deposit rate and minimum subscription quantity for the IPO\n2. The quantities and methods for equal and proportional allocation\n3. The subscription closing date, allocation date, and refund date\n4. Whether refund interest applies and the annual interest rate\n5. The start and end dates of the interest calculation period\n6. Whether weekends and public holidays are included\n7. Subscription fees, loan interest, and other costs\n8. Taxes and the method for truncating amounts below KRW 1\n\n## Investors Using Subscription Loans Should Compare Net Costs\n\nEven if refund interest is paid, loan interest may be higher if an investor borrowed money for the subscription. For example, if the annual loan rate is 6% and the annual refund interest rate is 1%, the difference in rates alone is 5 percentage points annually. Loan processing costs or subscription fees may also be added.\n\nInvestment decisions should therefore use the following net effect.\n\n**Funding cost of the subscription = Loan interest + Fees − After-tax refund interest**\n\nRefund interest is partial compensation for funds that are tied up; it does not guarantee the profitability of an IPO or the share price after listing.\n\n## Conclusion\n\nAn IPO subscription deposit refund interest system would provide a certain level of compensation for investors’ funds while they wait after failing to receive an allocation. In proportional subscriptions involving large deposits, individual interest payments could amount to tens of thousands of won or more, and the total amount across the market could be substantial.\n\nHowever, the information currently known represents a direction under consideration. Until implementation, eligibility, interest rates, calculation periods, and taxes are finalized, a specific interest rate or payment amount should not be treated as confirmed. Final decisions should be based on announcements from the Financial Services Commission, applicable regulations, and the official subscription guidance of each securities firm.","content_html":"\u003cp\u003eA proposal is under consideration to pay interest on the portion of IPO subscription deposits that is returned because it is not used to pay for shares. The direction currently known is intended to return some of the economic benefit generated while investors cannot use their funds for several days.\u003c/p\u003e\n\u003cp\u003eHowever, whether the system will be introduced, when it will take effect, the applicable interest rate, and the interest calculation period have not been finalized. The calculations below are examples intended to explain the structure of the system and do not represent actual payment amounts.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#what-is-an-ipo-subscription-deposit\" class=\"anchor\" id=\"what-is-an-ipo-subscription-deposit\"\u003e\u003c/a\u003eWhat Is an IPO Subscription Deposit?\u003c/h2\u003e\n\u003cp\u003eAn IPO subscription deposit is money that an investor pays in advance to the lead securities firm when subscribing for shares of a company newly listed through an initial public offering. It serves a role similar to a security deposit that guarantees contractual performance.\u003c/p\u003e\n\u003cp\u003eIn a typical IPO subscription, 50% of the subscription amount is required as a deposit, but the deposit rate may vary depending on the stock and subscription terms. The exact terms should be checked in the company’s securities registration statement, prospectus, and the securities firm’s subscription guidance.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#basic-calculation-example\" class=\"anchor\" id=\"basic-calculation-example\"\u003e\u003c/a\u003eBasic Calculation Example\u003c/h3\u003e\n\u003cp\u003eAssume an investor applies for 100 shares priced at KRW 10,000 each, with a deposit rate of 50%.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eItem\u003c/th\u003e\n\u003cth\u003eCalculation\u003c/th\u003e\n\u003cth\u003eAmount\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003eSubscription amount\u003c/td\u003e\n\u003ctd data-label=\"Calculation\"\u003eKRW 10,000 × 100 shares\u003c/td\u003e\n\u003ctd data-label=\"Amount\"\u003eKRW 1 million\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003eRequired deposit\u003c/td\u003e\n\u003ctd data-label=\"Calculation\"\u003eKRW 1 million × 50%\u003c/td\u003e\n\u003ctd data-label=\"Amount\"\u003eKRW 500,000\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003ePayment due when 2 shares are actually allocated\u003c/td\u003e\n\u003ctd data-label=\"Calculation\"\u003eKRW 10,000 × 2 shares\u003c/td\u003e\n\u003ctd data-label=\"Amount\"\u003eKRW 20,000\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003eSimple refund amount\u003c/td\u003e\n\u003ctd data-label=\"Calculation\"\u003eKRW 500,000 − KRW 20,000\u003c/td\u003e\n\u003ctd data-label=\"Amount\"\u003eKRW 480,000\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003cp\u003eThe actual settlement method may reflect fees and terms specific to each securities firm.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#why-refund-interest-is-being-discussed\" class=\"anchor\" id=\"why-refund-interest-is-being-discussed\"\u003e\u003c/a\u003eWhy Refund Interest Is Being Discussed\u003c/h2\u003e\n\u003cp\u003eWhen IPO competition rates are high, investors receive far fewer shares than they applied for. Unused deposits are returned after the subscription and allocation procedures are completed, but during that period, investors generally cannot withdraw the funds or use them for other investments. If weekends or public holidays fall within the period, the perceived waiting time may be longer.\u003c/p\u003e\n\u003cp\u003eInvestor deposits are managed separately from securities firms’ proprietary assets to protect investors. Securities firms must separately deposit or place the funds in trust with a depository institution in accordance with applicable laws and regulations. The relationship between investment income generated in this process and deposit usage fees paid to investors varies depending on the product and account terms.\u003c/p\u003e\n\u003cp\u003eThe refund interest system is an approach intended to distribute to subscribers the economic benefit generated by holding funds that are ultimately not used for IPO shares for a certain period. Compared with the existing general practice of refunding only the principal, this could be a change favorable to investors.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#difference-between-equal-and-proportional-allocation\" class=\"anchor\" id=\"difference-between-equal-and-proportional-allocation\"\u003e\u003c/a\u003eDifference Between Equal and Proportional Allocation\u003c/h2\u003e\n\u003cp\u003eShares offered to retail subscribers are allocated through equal allocation and proportional allocation. The specific allocation ratios and calculation methods should be checked in the prospectus for each IPO.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eCategory\u003c/th\u003e\n\u003cth\u003eCore principle\u003c/th\u003e\n\u003cth\u003eEffect of deposit\u003c/th\u003e\n\u003cth\u003ePoints to note\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Category\"\u003eEqual allocation\u003c/td\u003e\n\u003ctd data-label=\"Core principle\"\u003eAllocation based on the number of subscribers who meet certain requirements\u003c/td\u003e\n\u003ctd data-label=\"Effect of deposit\"\u003eOnce the minimum subscription quantity is met, additional deposits have limited effect\u003c/td\u003e\n\u003ctd data-label=\"Points to note\"\u003eIf there are many applicants, a lottery may be used, so even 1 share is not guaranteed\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Category\"\u003eProportional allocation\u003c/td\u003e\n\u003ctd data-label=\"Core principle\"\u003eAllocation in proportion to the subscription quantity and competition rate\u003c/td\u003e\n\u003ctd data-label=\"Effect of deposit\"\u003eA larger deposit increases the number of shares that may be allocated\u003c/td\u003e\n\u003ctd data-label=\"Points to note\"\u003eIf the competition rate is high, even a large deposit may result in only a few shares\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003cp\u003eIn particular, proportional-allocation subscribers may pay deposits of tens of millions or hundreds of millions of won. If the actual allocation amount is small, most of the deposit will be subject to refund, so these subscribers may be relatively more affected by the refund interest system.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#how-to-calculate-estimated-refund-interest\" class=\"anchor\" id=\"how-to-calculate-estimated-refund-interest\"\u003e\u003c/a\u003eHow to Calculate Estimated Refund Interest\u003c/h2\u003e\n\u003cp\u003eAlthough the final rules have not been determined, a simple daily prorated calculation can be expressed as follows.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eEstimated interest = Refund amount subject to interest × Annual interest rate × Number of recognized days ÷ 365\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFor example, if the refundable amount is KRW 400 million, the annual interest rate is 2%, and the recognized period is 3 days, the simple pre-tax interest is as follows.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eKRW 400 million × 2% × 3 ÷ 365\u003c/li\u003e\n\u003cli\u003eApproximately KRW 65,753\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eUnder the same conditions, the result will change if the period or interest rate changes.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eRefund amount\u003c/th\u003e\n\u003cth\u003eAnnual interest rate\u003c/th\u003e\n\u003cth\u003eRecognized period\u003c/th\u003e\n\u003cth\u003eSimple calculated interest\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Refund amount\"\u003eKRW 10 million\u003c/td\u003e\n\u003ctd data-label=\"Annual interest rate\"\u003e1%\u003c/td\u003e\n\u003ctd data-label=\"Recognized period\"\u003e3 days\u003c/td\u003e\n\u003ctd data-label=\"Simple calculated interest\"\u003eApproximately KRW 822\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Refund amount\"\u003eKRW 100 million\u003c/td\u003e\n\u003ctd data-label=\"Annual interest rate\"\u003e1%\u003c/td\u003e\n\u003ctd data-label=\"Recognized period\"\u003e3 days\u003c/td\u003e\n\u003ctd data-label=\"Simple calculated interest\"\u003eApproximately KRW 8,219\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Refund amount\"\u003eKRW 400 million\u003c/td\u003e\n\u003ctd data-label=\"Annual interest rate\"\u003e1%\u003c/td\u003e\n\u003ctd data-label=\"Recognized period\"\u003e3 days\u003c/td\u003e\n\u003ctd data-label=\"Simple calculated interest\"\u003eApproximately KRW 32,877\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Refund amount\"\u003eKRW 400 million\u003c/td\u003e\n\u003ctd data-label=\"Annual interest rate\"\u003e2%\u003c/td\u003e\n\u003ctd data-label=\"Recognized period\"\u003e3 days\u003c/td\u003e\n\u003ctd data-label=\"Simple calculated interest\"\u003eApproximately KRW 65,753\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Refund amount\"\u003eKRW 400 million\u003c/td\u003e\n\u003ctd data-label=\"Annual interest rate\"\u003e2%\u003c/td\u003e\n\u003ctd data-label=\"Recognized period\"\u003e5 days\u003c/td\u003e\n\u003ctd data-label=\"Simple calculated interest\"\u003eApproximately KRW 109,589\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003cp\u003eThe amounts in the table are examples that do not reflect taxes, fees, rounding to the nearest won, or the actual applicable standards.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#how-should-the-assumption-of-krw-450-trillion-annually-be-interpreted\" class=\"anchor\" id=\"how-should-the-assumption-of-krw-450-trillion-annually-be-interpreted\"\u003e\u003c/a\u003eHow Should the Assumption of KRW 450 Trillion Annually Be Interpreted?\u003c/h2\u003e\n\u003cp\u003eAssuming that total annual IPO subscription deposits amount to KRW 450 trillion and that an annual rate of 1% applies to all funds for an average of 3 days, the calculation is as follows.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eKRW 450 trillion × 1% × 3 ÷ 365 = Approximately KRW 37 billion\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThis figure is an arithmetic scenario intended to estimate the scale of the system. It is not equal to the amount that investors would actually receive for the following reasons.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eKRW 450 trillion is a flow figure representing the combined subscription deposits for multiple IPOs, not the balance at a single point in time.\u003c/li\u003e\n\u003cli\u003eOnly the final refund amount, rather than the entire deposit, may be subject to calculation.\u003c/li\u003e\n\u003cli\u003eRefund schedules and fund-holding periods vary by stock.\u003c/li\u003e\n\u003cli\u003eThe actual applicable interest rate may differ from 1% annually.\u003c/li\u003e\n\u003cli\u003eSecurities firm costs, taxes, and standards for truncating amounts below KRW 1 may be reflected.\u003c/li\u003e\n\u003cli\u003eEven if the system is implemented, it may apply only to subscriptions made after the effective date.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTherefore, approximately KRW 37 billion is not a confirmed source of funds or payment forecast, but a theoretical total based on the stated assumptions.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#key-issues-that-have-not-yet-been-decided\" class=\"anchor\" id=\"key-issues-that-have-not-yet-been-decided\"\u003e\u003c/a\u003eKey Issues That Have Not Yet Been Decided\u003c/h2\u003e\n\u003ch3\u003e\n\u003ca href=\"#1-what-amount-will-be-used-as-the-basis-for-calculation\" class=\"anchor\" id=\"1-what-amount-will-be-used-as-the-basis-for-calculation\"\u003e\u003c/a\u003e1. What Amount Will Be Used as the Basis for Calculation?\u003c/h3\u003e\n\u003cp\u003eIt must be determined whether interest will be calculated on the entire subscription deposit or only on the net refund amount after deducting the payment for allocated shares. Considering the purpose of the system, the refund amount is likely to be the focus, but the final rules must be checked.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#2-when-does-the-interest-calculation-period-begin-and-end\" class=\"anchor\" id=\"2-when-does-the-interest-calculation-period-begin-and-end\"\u003e\u003c/a\u003e2. When Does the Interest Calculation Period Begin and End?\u003c/h3\u003e\n\u003cp\u003eThe amount will vary depending on whether interest is calculated from the time the subscription deposit is paid until the refund is processed, or from the subscription closing date. A method is also needed for handling cases in which payment times differ.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#3-are-weekends-and-public-holidays-included\" class=\"anchor\" id=\"3-are-weekends-and-public-holidays-included\"\u003e\u003c/a\u003e3. Are Weekends and Public Holidays Included?\u003c/h3\u003e\n\u003cp\u003eWeekends and public holidays would be included if calendar days are used, but they may be excluded if business days are used. This issue could create a significant difference for IPOs that occur around extended holidays.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#4-who-determines-the-interest-rate\" class=\"anchor\" id=\"4-who-determines-the-interest-rate\"\u003e\u003c/a\u003e4. Who Determines the Interest Rate?\u003c/h3\u003e\n\u003cp\u003eIt has not been decided whether the government will announce a single interest rate or whether securities firms will independently set their rates under consistent calculation principles. If rates vary by securities firm, investors will need to compare not only subscription fees but also refund interest terms.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#5-how-will-taxes-and-costs-be-handled\" class=\"anchor\" id=\"5-how-will-taxes-and-costs-be-handled\"\u003e\u003c/a\u003e5. How Will Taxes and Costs Be Handled?\u003c/h3\u003e\n\u003cp\u003eDetailed standards are needed regarding how refund interest will be classified under income tax law, whether it will be subject to withholding tax, and whether securities firms may deduct administrative costs.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#items-investors-should-check\" class=\"anchor\" id=\"items-investors-should-check\"\u003e\u003c/a\u003eItems Investors Should Check\u003c/h2\u003e\n\u003cp\u003eIf the system is actually implemented, investors should check the following before subscribing.\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eThe deposit rate and minimum subscription quantity for the IPO\u003c/li\u003e\n\u003cli\u003eThe quantities and methods for equal and proportional allocation\u003c/li\u003e\n\u003cli\u003eThe subscription closing date, allocation date, and refund date\u003c/li\u003e\n\u003cli\u003eWhether refund interest applies and the annual interest rate\u003c/li\u003e\n\u003cli\u003eThe start and end dates of the interest calculation period\u003c/li\u003e\n\u003cli\u003eWhether weekends and public holidays are included\u003c/li\u003e\n\u003cli\u003eSubscription fees, loan interest, and other costs\u003c/li\u003e\n\u003cli\u003eTaxes and the method for truncating amounts below KRW 1\u003c/li\u003e\n\u003c/ol\u003e\n\u003ch2\u003e\n\u003ca href=\"#investors-using-subscription-loans-should-compare-net-costs\" class=\"anchor\" id=\"investors-using-subscription-loans-should-compare-net-costs\"\u003e\u003c/a\u003eInvestors Using Subscription Loans Should Compare Net Costs\u003c/h2\u003e\n\u003cp\u003eEven if refund interest is paid, loan interest may be higher if an investor borrowed money for the subscription. For example, if the annual loan rate is 6% and the annual refund interest rate is 1%, the difference in rates alone is 5 percentage points annually. Loan processing costs or subscription fees may also be added.\u003c/p\u003e\n\u003cp\u003eInvestment decisions should therefore use the following net effect.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFunding cost of the subscription = Loan interest + Fees − After-tax refund interest\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eRefund interest is partial compensation for funds that are tied up; it does not guarantee the profitability of an IPO or the share price after listing.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#conclusion\" class=\"anchor\" id=\"conclusion\"\u003e\u003c/a\u003eConclusion\u003c/h2\u003e\n\u003cp\u003eAn IPO subscription deposit refund interest system would provide a certain level of compensation for investors’ funds while they wait after failing to receive an allocation. In proportional subscriptions involving large deposits, individual interest payments could amount to tens of thousands of won or more, and the total amount across the market could be substantial.\u003c/p\u003e\n\u003cp\u003eHowever, the information currently known represents a direction under consideration. Until implementation, eligibility, interest rates, calculation periods, and taxes are finalized, a specific interest rate or payment amount should not be treated as confirmed. Final decisions should be based on announcements from the Financial Services Commission, applicable regulations, and the official subscription guidance of each securities firm.\u003c/p\u003e\n","tags":["IPO stocks","subscription deposit","refund interest","IPO","brokerage firm"],"faqs":[{"question":"Has the payment of interest on refunded IPO subscription deposits been confirmed?","answer":"It cannot yet be considered a finalized system. Whether and when it will be implemented, the applicable interest rate, the amount subject to calculation, and the eligible period will not be known until the financial authorities issue their final announcement and the relevant regulations are released."},{"question":"Will interest accrue on the entire IPO subscription deposit?","answer":"Based on the purpose of the proposal, the primary amount eligible may be the refunded amount that is returned without being used for the actual payment for shares. However, the final regulations must be checked to determine whether the calculation will be based on the entire deposit or only the net refund amount."},{"question":"How can the refund interest be calculated?","answer":"A simple calculation involves multiplying the refundable amount by the annual interest rate and the number of eligible days, then dividing by 365. For example, applying an annual rate of 1% to KRW 100 million for three days would yield approximately KRW 8,219 before tax, but the actual calculation method may differ."},{"question":"Does refund interest also accrue on weekends or public holidays?","answer":"This has not yet been finalized. They would be included if calendar days are used and excluded if only business days are recognized. For subscriptions that include a holiday period, this standard has a significant impact on the actual amount paid."},{"question":"Can the refund interest rate vary by securities company?","answer":"If a system is adopted under which securities companies independently set their interest rates according to consistent principles, rates may differ by company. The final system and guidance from securities companies must be checked to determine whether a single interest rate will apply."},{"question":"Is at least one share guaranteed when subscribing through equal allocation?","answer":"No. Even if the minimum subscription requirements are met, a lottery may be used if the number of subscribers exceeds the number of shares available for equal allocation, so you may not receive even one share."},{"question":"Can refund interest offset the cost of taking out a subscription loan?","answer":"In most cases, the loan interest rate may be higher than the expected refund interest rate, making it difficult to offset the entire cost. You should compare the net cost by calculating the loan interest, subscription fees, and after-tax refund interest together."},{"question":"Is refund interest also subject to tax?","answer":"The income classification and whether tax will be withheld at source can only be determined once the system's legal structure has been finalized. Because the amount calculated before tax may differ from the amount actually deposited, you should check the securities company's tax guidance when the system is implemented."},{"question":"Will the introduction of refund interest make IPO subscriptions more advantageous?","answer":"Although it would provide some additional compensation for having funds tied up, it would not change the investment risks of IPOs. You should also consider a decline in the share price after listing, a low number of allocated shares, loan interest, and fees."}],"sources":[{"url":"https://www.fsc.go.kr/","title":"Financial Services Commission","type":"source"},{"url":"https://www.law.go.kr/법령/자본시장과금융투자업에관한법률","title":"National Law Information Center - Financial Investment Services and Capital Markets Act","type":"source"},{"url":"https://www.kofia.or.kr/","title":"Korea Financial Investment Association","type":"source"},{"url":"https://www.ksfc.co.kr/","title":"Korea Securities Finance Corporation","type":"source"},{"url":"https://dart.fss.or.kr/","title":"Financial Supervisory Service Electronic Disclosure System DART","type":"source"}],"images":[{"id":357,"url":"https://injoys.com/rails/active_storage/blobs/proxy/eyJfcmFpbHMiOnsiZGF0YSI6NDIxNywicHVyIjoiYmxvYl9pZCJ9fQ==--773c81554ecf2abaff1d18af81bcc1c3a6e0dee8/ai-edf4fdb8.webp","is_representative":true,"generation_method":"ai_image","license":"ai_generated","mime_type":"image/webp","translations":{"ko":{"alt":"동전과 돈주머니를 올린 저울 주변의 달력, 시계, 깔때기와 통계 차트","caption":"청약증거금 환급 시기와 이자 계산의 여러 요소를 상징적으로 보여준다.","description":null},"en":{"alt":"Balance scale with coins and a money bag, surrounded by a calendar, clock, funnel, and charts","caption":"The illustration symbolizes the timing and calculation factors involved in subscription deposit refunds.","description":null},"ja":{"alt":"硬貨とお金の袋を載せた天秤の周りにカレンダー、時計、漏斗、グラフ","caption":"申込証拠金の還付時期と利息計算の要素を象徴的に示している。","description":null},"es":{"alt":"Balanza con monedas y una bolsa de dinero, rodeada de calendario, reloj, embudo y gráficos","caption":"La ilustración simboliza los plazos y factores de cálculo del reembolso de depósitos de suscripción.","description":null},"id":{"alt":"Neraca berisi koin dan kantong uang, dikelilingi kalender, jam, corong, dan grafik","caption":"Ilustrasi ini melambangkan waktu dan faktor perhitungan pengembalian dana jaminan pemesanan saham.","description":null},"pt":{"alt":"Balança com moedas e saco de dinheiro, cercada por calendário, relógio, funil e gráficos","caption":"A ilustração simboliza os prazos e fatores de cálculo do reembolso do depósito de subscrição.","description":null},"zh-hant":{"alt":"放有硬幣與錢袋的天平，周圍有日曆、時鐘、漏斗及統計圖表","caption":"插圖象徵申購保證金退款時間與利息計算的各項因素。","description":null},"de":{"alt":"Waage mit Münzen und Geldbeutel, umgeben von Kalender, Uhr, Trichter und Diagrammen","caption":"Die Illustration symbolisiert Fristen und Berechnungsfaktoren bei der Rückzahlung von Zeichnungseinlagen.","description":null}}}],"published_at":"2026-07-30T10:29:29+09:00","updated_at":"2026-07-30T10:29:29+09:00","license":"cc_by","translation_status":"reviewed","available_locales":["ko","en","ja","es"],"data_locales":["ko","en","ja","es","id","pt","zh-hant","de"],"url":"https://injoys.com/en/articles/ipo-subscription-deposit-refund-interest-korea"}