When the holder of emerging stocks, shares not listed on a stock exchange, or shares that are not traded in the business places of securities firms, registers a secondary distribution of the said stocks to unspecified persons, the FSC may reject the registration if any of the following circumstances obtains:
- Less than 3 years have elapsed since the incorporation registration of the issuer of the stocks.
- Both the final operating income and pre-tax income as ratios of the equity attributable to owners of the parent as reported in the issuer's financial reports fail to meet any of the below conditions. However, the profitability as reported in the financial reports does not take into account the effects on the issuer brought about by the net profit (or net loss) attributable to its non-controlling interests.
- The said ratios for the most recent fiscal year reach 2 percent or more, and the issuer has no accumulated losses for the most recent accounting period.
- The said ratios for the most recent 2 fiscal years reach 1 percent or more.
- The average of the said ratios for the most recent 2 fiscal years reaches 1 percent or more, and the profitability of the issuer for the most recent fiscal year is more favorable than that for the previous fiscal year.
- The net asset value of the shares issued by the issuer in the most recent year is lower than its par value, or the net worth before distribution does not reach one-third of total assets.
- Where the FSC otherwise deems the secondary distribution to unspecified persons inappropriate.