Lee Bok-hyun "Will Discuss Periodic Designation System Improvement Once Data Is Secured"

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), discussed various topics including major issues related to disclosures and accounting with the chairpersons and executives of member companies of the Korea Listed Companies Association.

In particular, regarding the periodic auditor designation system, which places a significant burden on companies, Governor Lee stated that once the data necessary for analyzing the policy's effectiveness is prepared, he will discuss potential improvements with the Financial Services Commission. The periodic auditor designation system is a policy where, for listed companies with freely appointed auditors for six consecutive business years (excluding KONEX) and unlisted companies where ownership and management are separated, the authorities designate auditors for the next three business years.

According to the FSS on the 25th, Governor Lee, along with Jung Gu-yong, Chairman of the Korea Listed Companies Association, Jung Woo-yong, Vice Chairman of the association, and four other executives from member companies, held a luncheon meeting to discuss the pre-disclosure system for insider trading, ESG (Environmental, Social, and Governance) disclosure system, major accounting system improvement measures, and the periodic auditor designation system. They also exchanged views on the difficulties faced by domestic companies amid ongoing domestic and international uncertainties such as increased corporate loans, the sharp rise in U.S. Treasury yields, and the war between Israel and the Palestinian armed group Hamas.

The chairpersons and member companies of the association requested that the ongoing pre-disclosure system for insider trading be eased so that it does not effectively restrict the stock disposal rights of executives and major shareholders or cause side effects such as sharp stock price declines due to pre-disclosure.

They also expressed hope that "the opinions of listed companies will be more broadly reflected during the preparation of the ESG disclosure system roadmap" and asked for attention to the burden of duplicate disclosures caused by different ministries requiring ESG information disclosure. Furthermore, they requested a thorough implementation of major accounting system improvements such as exemption from audits of consolidated internal accounting control systems and rationalization of the designation system, while asking for a review of the periodic auditor designation system, which imposes a heavy burden on companies.

In response, Governor Lee said, "Regarding the pre-disclosure of insider trading, we will strive to reasonably reflect the burden and acceptability of disclosure obligors while preserving the purpose of the system during the ongoing discussions in the National Assembly's Judiciary Committee and the subsequent revision of subordinate regulations." He added, "For ESG disclosures, reflecting corporate realities, the introduction timing was recently postponed to after 2026. In the process of specifying disclosure standards, targets, and timing, we will coordinate to align with international trends while ensuring companies are given sufficient preparation time."

Governor Lee also stated, "We are fully aware of the difficulties faced by listed companies since the enforcement of the new External Audit Act, and we will actively work to ensure that accounting system improvement measures to alleviate corporate burdens are implemented promptly." He added, "Regarding the periodic auditor designation system, once the data necessary for policy effect analysis is secured, we will discuss potential improvements with the Financial Services Commission."

The FSS said, "We will faithfully reflect the opinions raised on the ground in our supervisory duties and continue to collect diverse external opinions through close communication with the field."

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