Active Business Activities Despite the COVID-19 Pandemic... Flood of M&A, Supply Contracts, and Facility Investment Disclosures

Analysis of Disclosure Aggregation by Type and Reason for Listed Companies on the KOSPI and KOSDAQ Markets
Active Business Activities Including Facility Investment, Asset Acquisition/Disposition, Spin-offs, Mergers, and Acquisitions

[Asia Economy Reporter Lee Seon-ae] Despite the COVID-19 pandemic, companies did not shrink back. They actively engaged in management activities such as facility investments, asset acquisitions and disposals, spin-offs, mergers, and acquisitions to seize growth opportunities in the upcoming COVID-19 endemic era. This was clearly confirmed in the disclosures of listed companies on the Korea Exchange.

On the 26th, Asia Economy compared the disclosures by type and reason of listed companies on the Korea Exchange’s KOSPI and KOSDAQ markets in the year before COVID-19 became widespread, 2019, with those of last year. The number of disclosures by KOSPI-listed companies increased by 23.4% over two years to 18,945 cases in 2021. Considering that the number of listed companies increased by only 3.1%, from 799 to 824 during the same period, it is inferred that the increase in disclosures was due more to active management activities requiring disclosure rather than just the increase in the number of listed companies.

The Disclosure Department of the KOSPI Market Headquarters at the Korea Exchange explained, "It is notable that disclosures related to corporate investment activities such as acquisition and disposal of other companies’ stocks and acquisition and disposal of tangible assets increased," adding, "The increase in disclosures related to clinical trials and product approvals by pharmaceutical and bio companies also contributed to the overall increase in disclosure cases."

Mandatory disclosures (timely disclosures) requiring reporting of important matters increased by 21.1% to 15,246 cases last year. The Disclosure Department stated, "There was an increase not only in single sales and supply contracts but also in debt guarantees and collateral provisions related to corporate financial structure improvement and governance, as well as changes in major shareholders," and added, "Disclosures related to subsidiaries also increased significantly, with many decisions on acquisition and disposal of other companies’ stocks by subsidiaries."

When tallying disclosures by reason for timely disclosures, corporate management activities stood out. Facility investments increased by 30 cases to 99. Business transfers, spin-offs, and mergers increased by 49 cases to 160. Single sales and supply contracts surged from 1,299 to 1,841 cases. Acquisition and disposal of other companies’ stocks were 610 cases (up 125), and acquisition and disposal of tangible assets were 131 cases (up 24). Debt guarantees and collateral provisions increased from 634 to 974 cases, changes in major shareholders from 47 to 76 cases, and subsidiary-related disclosures from 247 to 484 cases.

Comprehensive disclosures, where listed companies voluntarily disclose all important information such as clinical trials or product approvals beyond mandatory disclosure items, increased by 23.8% to 530 cases. Voluntary disclosures, where companies disclose information not required by mandatory disclosure but on their own judgment, increased by 62.6% to 1,720 cases. Fair disclosures, which are pre-disclosures to prevent selective provision of information to specific parties, increased by 17.8% to 1,930 cases. However, inquiry disclosures, which are made upon requests for confirmation from the exchange, decreased from 64 to 49 cases. The decrease in inquiry disclosures is attributed to a reduction in inquiries related to market fluctuations. Although market index volatility increased with the onset of COVID-19, it is interpreted that volatility decreased last year compared to before.

The flow of active corporate management activities was also detected in comprehensive and voluntary disclosures. When tallying disclosures by reason in comprehensive disclosures, conditional contracts such as MOUs increased from 25 to 35 cases, technology transfer contracts from 8 to 15 cases, progress in mergers and acquisitions (M&A) from 7 to 9 cases, and selection of successful bidders and construction companies from 25 to 51 cases. In voluntary disclosures, acquisition and disposal of other companies’ stocks increased from 77 to 187 cases, and single sales and supply contracts increased from 197 to 262 cases. Capital increases and bond subscriptions and issuances were also frequent, increasing by 122 cases to 289. Sustainability management report disclosures increased from 22 to 96 cases. Disclosures related to future business plans were also frequent. Fair disclosures of future business and management plans were tallied at 39 cases (up 25).

The number of disclosures by KOSDAQ-listed companies increased by 10.4% to 23,723 cases in 2021. During the same period, the number of listed companies increased by 9%, from 1,405 to 1,532. Timely disclosures increased by 11.7% to 19,558 cases. The Disclosure Department of the KOSDAQ Market Headquarters at the Korea Exchange explained, "The overall increase in disclosure cases was due to the expansion in the number of listed companies, and the increase in capital increase disclosures and bond issuances related to stock for the purpose of securing investment and operating funds by listed companies also contributed to the overall increase in disclosure cases."

In timely disclosures, single sales and supply contracts increased from 1,046 to 1,609 cases. This was thanks to active orders and supplies of medical devices such as diagnostic kits due to the spread of COVID-19. Business transfers, spin-offs, and mergers increased from 240 to 305 cases. Acquisition and disposal of tangible assets and facility investments were tallied at 219 cases (up 33) and 172 cases (up 52), respectively, and capital increases and decreases were 1,357 cases (up 44). Changes in CEOs and subsidiary disclosures increased from 408 to 429 cases and from 275 to 346 cases, respectively.

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