Korea Exchange Announces Key Inspection Items for Corporate Governance Reports

Selection of 15 Key Inspection Items Including Cash Dividends and CEO Succession Policies

The Korea Exchange announced on the 16th that it will provide an advance notice of the '2024 Key Inspection Items for Corporate Governance Reports' of KOSPI-listed companies. KOSPI-listed companies with consolidated assets of 500 billion KRW or more must submit their corporate governance reports by May 31 every year.

Since 2020, based on the inspection results of the reports, the Exchange plans to select and focus on key inspection items mainly related to frequently occurring disclosure errors, actively promoted policies by financial authorities, and recent revisions to the corporate governance report guidelines. In addition to the key inspection items, if any significant omissions or errors are found, the Exchange will inspect and take appropriate measures.

The key inspection items disclosed by the Exchange on this day consist of a total of 15 items: 8 core indicators and 7 detailed principles.

The core indicators include ▲providing predictability regarding cash dividends ▲establishing and operating CEO succession policies ▲establishing and operating risk management and other internal control policies ▲whether an outside director serves as the chairperson of the board ▲prevention of appointing executives responsible for damaging corporate value ▲all board members not being of the same gender ▲establishment of an independent internal audit department (support organization for internal audit tasks) ▲holding quarterly meetings between the internal audit organization and external auditors, among 8 items.

The detailed principles include ▲provisions on dividend predictability ▲communication with minority shareholders, overseas investors, etc. ▲capital raising matters convertible into stocks ▲risk management and other internal control policies ▲prevention of appointing executives responsible for damaging corporate value ▲matters related to executive compensation systems ▲matters related to the independent internal audit department (support organization for internal audit tasks), totaling 7 items.

The Exchange plans to inspect whether listed companies have accurately and faithfully prepared their reports in accordance with the guidelines presented by the Exchange. In particular, regarding the detailed principles, the Exchange will closely examine whether mandatory disclosure items have been included, the basis for compliance judgments, and whether reasons for non-compliance and future plans have been sufficiently described.

An official from the Exchange stated, "After the submission deadline on May 31, we will promptly conduct inspections and complete follow-up measures such as corrective disclosures by August," adding, "We plan to provide preparation standards for each key inspection item and conduct training sessions for practitioners to support companies in preparing thorough reports."

The preparation standards for each key inspection item will be provided through the Exchange’s electronic disclosure system (KIND) and the ESG portal. Training sessions for practitioners will be held three times: ▲(1st) April 18 ▲(2nd) April 25 ▲(3rd) May 3.

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