Why do privately placed convertible bonds of listed companies carry a 1-year resale restriction?

Even if securities are privately placed with fewer than 50 persons, they are treated by law as a public offering, requiring a securities registration statement, if they could be transferred to 50 or more persons within 1 year of issuance.

Bonds convertible into a listed company's shares can fall under these resale criteria, so to avoid this, measures must be taken such as depositing (electronically registering) the bonds with the Korea Securities Depository immediately after issuance under an agreement not to withdraw or sell them for 1 year, or setting the period during which the rights cannot be exercised at 1 year or more after issuance. The regulations also allow issuing fewer than 50 certificates with a special clause prohibiting their division within 1 year. Because of these conditions, privately placed convertible bonds are difficult to transfer freely to others for a certain period after issuance.