Corporate bonds with detachable warrants (BDWs) will be no longer available for issuance from late next month in South Korea after 15 years of rocking the political and business circles

Corporate bonds with detachable warrant to vanish in S. Korea

Hwang Ji-hye, Oh Soo-hyun


Corporate bonds with detachable warrants (BDWs) will be no longer available for issuance from late next month in South Korea after 15 years of rocking the political and business circles. This has prompted companies to rush to issue BDWs. Buyers of BDWs can give the issuer warrant in exchange for shares and sell the shares at a market price to take profits if share price rises above the exercise price. However, the revised Capital Market Integration Act will take effect on August 29, which prohibits issuance of BDWs. The National Assembly came up with such regulations to prevent majority shareholders from employing BDWs to fraudulently gain profits or hand over their shares as inheritance. Since its adoption in 1999, BDWs became a subject of nationwide controversy when corporations such as Samsung SDS and Doosan were accused of issuing BDWs to illegally transfer shares to parties of special interest. The accusation prompted prosecutors to seek investigation into the charge. In addition, BDWs triggered political controversy during the presidential election last year, as prominent candidate Ahn Cheol-soo was suspected of having converted BDWs into stocks exceeding the bonds’ value while running a computer vaccine company. The issuance of bonds with warrants has jumped 30 percent year-on-year (yoy) this year, said local financial information provider FnGuide Wednesday.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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