Financial Services Commission Will Not Penalize Late Submission of Business Reports Due to COVID-19

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Park Jihwan] Financial authorities have prepared measures to exempt related penalties even if companies delay submitting business reports due to the spread of the novel coronavirus infection (COVID-19). Additionally, if it is difficult to approve financial statements at the regular shareholders' meeting next month, support will be provided to postpone or continue the meeting to obtain approval for the financial statements.

The Financial Services Commission and the Ministry of Justice announced on the 26th that they have prepared support measures to resolve difficulties faced by companies holding regular shareholders' meetings and to hold these meetings more safely and smoothly.

First, administrative sanctions such as fines imposed on companies and auditors for non-submission or delayed submission of financial statements, audit reports, and business reports will be exempted. Companies and auditors concerned about delayed submission of financial statements must apply for review to the Financial Supervisory Service and the Korean Institute of Certified Public Accountants from the 28th of this month to the 18th of next month. After reviewing the applications, the Securities and Futures Commission will decide on sanctions by the end of next month.

However, the company's fiscal year-end must be December 31 of last year, and the company's main business sites must be located in China or domestic special infectious disease control areas, or be conducting significant business operations in those areas. This especially applies to cases where the preparation of financial statements or external audits has been delayed due to the impact of COVID-19. For auditors, this applies if it is difficult to complete external audits within the deadline due to office closures caused by COVID-19 or COVID-19 quarantine measures.

The Financial Services Commission plans to individually review and determine the level of sanctions for companies that fail to apply within the application period and do not submit or delay submitting business reports. Companies subject to business report submission among those exempt from sanctions must submit business reports by May 15, the deadline for first-quarter reports.

The Financial Services Commission has allowed companies to postpone or continue the shareholders' meeting by resolution if it is difficult to approve financial statements at the March regular shareholders' meeting, enabling the meeting to be held again after April. Furthermore, if companies that applied to participate in the shareholders' meeting voluntary dispersion program inevitably change the date of the regular shareholders' meeting due to delayed external audits or the impact of COVID-19, incentives will be provided for participation in the voluntary dispersion program. The use of electronic voting and written voting by shareholders will be actively encouraged, and the electronic proxy system will be utilized to promote proxy voting.

A Financial Services Commission official explained, "This measure considers the recent difficulties some companies face in preparing and submitting financial statements, audit reports, and business reports on time due to delays in closing and external audits of Chinese subsidiaries caused by the spread of COVID-19."

This content was produced with the assistance of AI translation services.