At the Emergency Economic Ministers' Meeting, 'Corporate Value-Up'... "Promoting Capital Market Advancement"

Meeting Chaired by Deputy Prime Minister Choi Sang-mok on the 26th
Discussion on 'Capital Market Advancement Promotion Direction'
Government "Will Steadily Pursue with a Long-Term Perspective"

On the 26th, the government held an emergency economic ministers' meeting to discuss plans to enhance corporate value in order to resolve the Korea discount (undervaluation of the Korean stock market). The main focus is the 'Corporate Value-Up Support Plan,' which encourages KOSPI and KOSDAQ listed companies to increase their corporate value independently. Measures to establish a fair market order through sanctions against unfair trading and illegal short selling, as well as ways to improve investors' accessibility to the capital market through tax support, will also be promoted as key tasks this year.

According to the Financial Services Commission on the day, the emergency economic ministers' meeting chaired by Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, discussed the 'Capital Market Advancement Promotion Direction' with these contents. The government stated, "New policies such as the Corporate Value-Up Support Plan will be steadily pursued over the long term to lead to improvements in the practices and culture of the capital market."

Establishing Shareholder Value Corporate Management... Corporate Value-Up Support

The authorities plan to promote the Corporate Value-Up Support Plan announced on the day, aiming to establish shareholder value corporate management. Listed companies will autonomously establish and implement corporate value enhancement plans, and the authorities will provide incentives such as tax support, preferential selection of exemplary taxpayers, and preferential evaluation in exchange disclosures by the stock exchange to encourage voluntary participation. The development of the 'Korea Value-Up Index' and exchange-traded funds (ETFs), incorporation of the 'Stewardship Code' (active exercise of voting rights by institutional investors), and public disclosure of major indicator comparisons will also be carried out simultaneously. The authorities plan to finalize guidelines in the first half of the year after gathering external opinions.

Improvements to protect the interests of ordinary shareholders will also be initiated. Related systems such as physical division, pre-disclosure of insider trading, mandatory tender offers, convertible bonds, treasury stocks, and mergers and acquisitions (M&A) will be improved. The dividend procedure will be revised so that investors can invest with prior knowledge of dividends. Amendments to the Commercial Act to protect minority shareholders' rights, including the introduction of electronic general meetings of shareholders and improvements to the stock purchase claim rights, will also be pursued. The misuse of opportunity prohibition regulation, introduced to regulate directors' pursuit of private interests, will be improved by the second half of this year.

Crackdown on Unfair Trading and Illegal Short Selling

Efforts will also be made to establish a fair and transparent market order. Pre-monitoring and post-sanctions for unfair trading in the capital market will be strengthened. Fundamental institutional improvements to eradicate illegal short selling will also be undertaken. Penalties for illegal short selling will be strengthened, and aggravated punishments based on the scale of unjust profits will be introduced. The institutional improvement plan is scheduled to be finalized in the first half of this year.

Regulations on quasi-investment advisory businesses will also be strengthened. Following the amendment of the Capital Markets Act completed in January, subordinate regulations will be completed. The authorities have included interactive stock leading rooms in investment advisory businesses and have taken measures such as prohibiting loss compensation and profit guarantees and expanding reasons for ex officio cancellation.

Tax Improvements Including Abolition of Financial Investment Income Tax... Mandatory English Disclosures for Large KOSPI Companies

Investors' accessibility to the capital market will also be enhanced. First, the financial investment income tax (FIIT) system, which was scheduled to be introduced in 2025, will be abolished. The securities transaction tax will also be reduced to 0.15% by 2025. As of 2024, the securities transaction tax is 0.18%. The contribution limit and tax-exempt limit for Individual Savings Accounts (ISA) will also be increased. The contribution limit will be raised from 20 million KRW per year (total 100 million KRW) to 40 million KRW per year (total 200 million KRW), and the tax-exempt limit will be increased from 2 million KRW to 5 million KRW. However, for those subject to comprehensive financial income taxation, separate taxation (14%) benefits will be applied instead of tax exemption.

Accessibility for foreign investors will also be improved by abolishing foreigner IDs and mandating English disclosures. English disclosures of financial statements and major decision-making matters will be mandatory for KOSPI-listed companies with assets exceeding 10 trillion KRW. Accessibility to the foreign exchange market will also be enhanced. Participation of foreign financial institutions in the domestic foreign exchange market will be permitted, and the domestic foreign exchange market's trading hours, currently closing at 15:30, will be extended until 2:00 the next day, after the London trading hours close.

Various trading systems such as Alternative Trading Systems (ATS) and institutionalization of the unlisted stock market will also be established. ATS is scheduled to launch in the first half of 2025. The unlisted stock platform, currently operated as an innovative financial service, will also be institutionalized in the first half of this year. Efforts to strengthen domestic and international shareholder relations (IR) will be encouraged. The government and related organizations will jointly conduct local IR in major financial hubs, and foreign securities firms will be encouraged to actively participate in domestic IR. As part of expanding financial education, a concentrated financial education campaign will be conducted in the first quarter, and customized financial education will be provided throughout the year.

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