Regulations on large listed REIT holding companies will be eased and investment will become possible as an annuity savings fund

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In order to stimulate people’s indirect investment in real estate, regulations related to REITs (real estate investment companies) will be greatly eased and investment methods will be diversified. On the 12th, the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, and the Fair Trade Commission announced a plan to improve the REITs system to promote public offering and listing in order to resolve difficulties related to public offering/listed REITs and raising funds, and to increase listing incentives. First, the procedure for duplicating the review by the financial authorities for the public moritz authorization and the public moritz asset management company authorization will be simplified. Also, in the case of REITs, where professional institutional investors invest more than 30% and the registration system is applied instead of authorization, the Ministry of Land, Infrastructure and Transport’s business plan review process is omitted. However, in the case of REITs applying the registration system, the ratio requirement for pension funds will be raised from 30% to 50% to secure responsible investment and public interest. Instead, the ratio of development projects is autonomously determined by the resolution of the general shareholders’ meeting. Holding company regulations on large-scale (500 billion won or more) listed REITs with a mother-and-child structure will also be eased. Under the current law, listed REITs are subject to holding company regulations if their assets are more than KRW 500 billion and more than 50% of them are made up of subsidiary stocks. However, in the future, free investment in listed (parent) REITs is expected to be possible by excluding the holding company regulation from ‘there is no concern about concentration of economic power’. However, listed REITs must not hold stocks of general companies, the investment stage must be within Moritz-Zaritz, and must not belong to a group of companies subject to disclosure. The government also plans to simplify the business combination review process when acquiring REITs’ real estate assets so that investment activities can take place quickly. In addition, it has decided to allow publicly listed REITs investment through pension savings funds. Earlier, investment in publicly listed REITs was already permitted for retirement pensions at the end of 2019. The government explained that the purpose of this opportunity was to expand the opportunity to form old-age assets and promote REITs by clarifying the authoritative interpretation of pension savings funds and allowing publicly listed REITs investment. In addition, the government emphasized that it will block planned real estate that abuses the name of REITs and protect investors by strengthening the soundness of asset management companies (AMCs). In addition, the government added that tax support will continue as the low-rate (9%) separate taxation on dividend income from public Moritz, which was originally scheduled to be sunset last year, and the heavy taxation of REITs acquisition tax were extended to 2023 and 2024, respectively, last month, the government added. As of the end of last year, the total assets of domestic REITs amounted to 76 trillion won, and there were 52 asset management companies. Hwang Yun-eun, head of the real estate industry division at the Ministry of Land, Infrastructure and Transport, said, “Public mortgages have grown mainly on unlisted companies with insufficient liquidity, so it is necessary to expand access from the point of view of individual investors. We plan to create an environment where even non-specialists can invest with confidence,” he said. By Choi Jong-hoon, staff reporter [email protected]

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