"Exemption from Administrative Sanctions for Delayed Submission of Monthly and Quarterly Reports Due to COVID-19"

Financial Authorities "Administrative Sanctions and Designated Management Item Designation Postponed"
Companies Expected to Submit Late Must Apply to FSC from 27th to 29th This Month
Policy to Further Extend Business Report Submission Deadline for Some Companies

[Asia Economy Reporter Minji Lee] Financial authorities plan to exempt administrative sanctions for companies that delayed submitting their quarterly and semi-annual reports this year due to the novel coronavirus infection (COVID-19). Additionally, the designation of management stocks due to delayed submissions will also be postponed.

According to the "Support Measures for Companies Delaying Quarterly and Semi-Annual Report Submissions Due to COVID-19" released on the 26th by the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange, administrative sanctions will be exempted and submission deadlines extended for companies that inevitably find it difficult to submit quarterly and semi-annual reports on time. Furthermore, companies requiring additional extensions for submitting business reports and other documents will be carefully reviewed for further deadline extensions.

The Financial Services Commission explained, "As the spread of COVID-19 continues overseas, some companies with major business sites located abroad are experiencing delays in quarterly and semi-annual settlements," adding, "Sixteen listed companies with subsidiaries in countries such as India and Malaysia have expressed difficulties to the association."

Delays in submitting quarterly and semi-annual reports due to settlement delays are subject to administrative sanctions under the Capital Markets Act. For listed companies, this also constitutes grounds for designation as management stocks by the Korea Exchange.

Accordingly, financial authorities plan to exempt administrative sanctions for delayed submissions of quarterly and semi-annual reports through resolutions by the Securities and Futures Commission, following precedents for exemptions related to delays in submitting business reports and other documents. Additionally, for listed companies, the designation as management stocks will be postponed.

Previously, financial authorities exempted administrative sanctions and extended the deadline to May 15 for listed companies that failed to submit financial statements, audit reports, and business reports by the original deadline (March 30) due to delays caused by the spread of COVID-19.

Companies or auditors expecting to be unable to submit quarterly and semi-annual reports by the May 15 deadline due to COVID-19 must apply for review to the Financial Supervisory Service.

For listed corporations or financial institutions with assets exceeding 500 billion KRW, which are required to attach review (audit) reports when submitting quarterly and semi-annual reports, the auditor must attach the company's opinion letter when applying, and the company must attach the auditor's opinion letter when applying. The application period is from the 27th to the 29th of this month, and the application details will be disclosed via the Financial Supervisory Service website and the Korea Exchange disclosure system.

The exemption criteria apply to companies with fiscal year-ends in June, September, or December of last year, whose major business sites (including subsidiaries) are located in countries affected by COVID-19 or conduct significant operations in those countries, and whose preparation of quarterly and semi-annual financial statements was delayed due to COVID-19 or various measures taken for COVID-19 prevention. Additionally, auditors who find it difficult to complete audits or reviews of quarterly and semi-annual financial statements within the deadline due to office closures or other measures related to COVID-19 or its prevention are also eligible. The decision on exemption from sanctions will be made by the Securities and Futures Commission on May 6.

Companies exempted from sanctions must submit their quarterly and semi-annual reports by June 15. Foreign corporations listed on the stock market with submission deadlines on the 30th of next month and companies preparing consolidated financial statements for the first time must submit by June 29.

Furthermore, financial authorities plan to extend submission deadlines by an additional 30 days for companies requiring further extensions for business reports and other documents after review. The application period for additional extensions coincides with the exemption application period for quarterly and semi-annual reports, from the 27th to the 29th of this month.

The Financial Services Commission stated, "Considering that the submission deadline for business reports has already been extended by 45 days, only companies or auditors with clear reasons will be granted additional extensions," and added, "We plan to closely monitor to ensure that no companies suffer unfair damage due to COVID-19."

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