FSS to Strengthen Investigation of False Businesses and Unfair Trade in Secondary Batteries and More

The Financial Supervisory Service (FSS) will strengthen disclosure requirements for the progress of new business projects and conduct thorough reviews of the disclosures. It will also investigate unfair trading related to false new business promotions.

On the 27th, the FSS stated, "During periods when theme stocks related to specific businesses are trending, there is a high possibility that unfair trading groups may exploit the enthusiasm for theme stocks. Therefore, it is necessary to strengthen disclosure reviews and investigations to protect investors."

Accordingly, new businesses added as business objectives in the articles of incorporation must mandatorily disclose progress (including plans and reasons for non-progression) in subsequent regular reports. The FSS plans to separately select business sectors requiring investment caution, such as secondary batteries, and conduct focused inspections on the disclosure items.

Among stocks that have added new businesses unrelated to their existing core businesses as business objectives, the FSS will analyze abnormal stock price surges, sales of shares by major shareholders, and whether the actual business is being conducted. It will promptly initiate investigations into stocks suspected of unfair trading.

The FSS urged, "Adding a business objective in the articles of incorporation does not guarantee the actual promotion of the new business or revenue generation. Therefore, general investors should carefully consider the connection with existing core businesses and whether a concrete business plan has been established before deciding to invest." It added, "If a company deceives investors by pretending to enter a new business without the intention or capability to do so and uses this for trading financial investment products, it may constitute unfair trading under the Capital Markets Act. Listed companies intending to pursue new businesses should exercise caution in disclosures and media promotions related to business progress."

Meanwhile, reflecting the high investment enthusiasm for future growth new business-related stocks, 105 listed companies added secondary battery, artificial intelligence, and robotics-related businesses to their business objectives in the past year (2022 to March 2023). There were 59 companies that changed their articles of incorporation in 2022 and 46 companies from January to March 2023. Among these, 91 companies are listed on KOSDAQ, and 54 companies added secondary battery-related businesses.

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