Exchange Conducts On-site Consulting for Establishing Disclosure System for SMEs and Innovative Companies

[Asia Economy Reporter Song Hwajeong] The Korea Exchange announced on the 4th that it will conduct on-site consulting to foster a culture of voluntary and responsible disclosure among small and innovative companies and to strengthen long-term disclosure capabilities.

This on-site consulting targets KOSDAQ-listed companies that need support in establishing disclosure systems. External consultants and Korea Exchange staff visit the companies to provide on-site consulting, which includes diagnosing the company's disclosure system, analyzing deficiencies, suggesting improvement measures to address vulnerabilities, and conducting education to raise disclosure awareness among executives and employees.

This on-site consulting was prepared based on the judgment that there are limitations to strengthening post-violation sanctions for disclosure obligations, as the number of companies with poor disclosure has been increasing. The number of poor disclosure cases rose from 53 in 2015 to 72 in 2016, then 71 in 2017, 101 in 2018, and 119 in 2019, showing a continuous upward trend. This year, as of the end of July, the number reached 80. A Korea Exchange official explained, "An operation method focused solely on sanctions can alert investors to poor disclosure, but expanding disclosure capabilities is limited if left to the companies' autonomy. Therefore, it was promoted to proactively support companies with weak disclosure capabilities in establishing disclosure systems at the Korea Exchange level to enhance their own disclosure capabilities for faithful disclosure."

The Korea Exchange selected a total of 36 companies as consulting targets from small and innovative companies (with total assets under 200 billion KRW as of the most recent fiscal year-end) that have a strong willingness to make efforts to establish disclosure systems. The selection was made by comprehensively considering the necessity of support for faithful disclosure and the level of disclosure system establishment, prioritizing companies accordingly and setting individual visit schedules.

The consulting proceeds in the order of pre-diagnosis, on-site visit, and result reporting. In the pre-diagnosis stage, a diagnostic tool assessing company-wide and disclosure item-specific disclosure capability levels is used to identify the company's weak disclosure areas. Next, during the on-site visit stage, the disclosure system is diagnosed and deficiencies analyzed through interviews with disclosure officers, and awareness-raising education through management interviews, as well as support related to disclosure systems and practical application methods, are conducted. Finally, in the result reporting stage, based on the individual analysis after the on-site visit, improvement measures tailored to the company's situation are proposed for the disclosure system.

A Korea Exchange official stated, "It is expected to contribute to expanding disclosure capabilities for investor protection and preventing poor disclosure through efficient support for establishing disclosure systems for small and innovative companies," adding, "In the future, we plan to move away from a sanction-centered poor disclosure system and induce voluntary capability enhancement for responsible disclosure by listed companies so that disclosure soundness can be continuously improved."

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