[Initial Perspective] The Quantity and Quality of 'English Public Notices' Must Be Dramatically Increased

Difficult to Expect Foreign Investment Expansion with Information Asymmetry Intact
Need to Enhance Investment Attractiveness through 'Value-Up' and Improve Investment Environment

Several years ago, a global portfolio manager at Fidelity Asset Management cited the lack of English-language corporate information as the top challenge for investing in Korea. They pointed out that information asymmetry and opacity, as well as the high costs required for information search and professional financial translation, make it difficult to significantly increase Korean investment positions. Compliance officers at foreign investment banks (IBs) often expressed frustration that Korean financial authorities do not accept English disclosures. Although foreign investors have been participating in the Korean capital market for decades, the pace of globalization in the Korean market has been very slow. While we have not broken down the information barriers, many opportunities to attract foreign investors to the Korean market have likely been missed.

Therefore, expectations were placed on the mandatory English disclosures introduced for some companies starting this year. KOSPI-listed companies are required to submit English disclosures within three days after submitting important disclosure information to the Korea Exchange (KRX) in Korean. This applies to KOSPI-listed companies with assets of 10 trillion won or more, or those with foreign ownership of 30% or more (for companies with assets between 2 trillion and 10 trillion won). From 2026, the mandatory English disclosure requirement will expand to KOSPI-listed companies with assets of 2 trillion won or more. The time lag between submitting Korean disclosures and English disclosures will also be shortened from within three days to simultaneous submission.

Nonetheless, criticisms persist that the volume and scope of English disclosures remain woefully insufficient. Under the first phase of mandatory English disclosures implemented this year, only disclosures related to financial statements such as dividend decisions, common statutory disclosures such as decisions on paid or free capital increases, and disclosures related to trading suspensions such as stock cancellations are mandatory. However, sufficient English disclosures are still not provided for investment information-rich documents such as securities registration statements for bond or new stock issuance and subscription details. Although there is a plan to expand the range of English disclosure documents in the second phase, it is uncertain how much the quantity and quality of these documents will improve. The Financial Supervisory Service plans to create an ‘English OpenDART’ system this year, but only the table of contents, tables, and forms of major reports will be translated into English, with no plans to translate the entire content.

There is much testimony that communication with foreign investors has increased and their investment interest has risen due to English disclosures. Celltrion, which has voluntarily and proactively provided English disclosures even before the mandatory requirement, was selected as the ‘Outstanding English Disclosure Corporation of the Year.’ Celltrion recently reported that active and detailed English disclosures during the merger process with Celltrion Healthcare greatly helped in understanding and persuading foreign investors.

With the abolition of the foreign investor registration system starting this year, the number of foreign investors considering Korean stock investments is likely to increase. As of the end of last year, the number of registered foreign investors, including pension funds, investment trusts, insurance companies, and banks, reached 53,501 and continues to grow. In particular, the registration numbers for investment companies and individual investors have recently increased rapidly. Despite the inconvenience of investor registration, this is evidence that the base of foreign investors interested in K-stocks has been steadily expanding.

If corporate value-up programs are strategies to enhance a company’s investment attractiveness, expanding English disclosures is about improving the investment environment. To seize opportunities during a period of expanding foreign investor base, it is necessary to significantly reduce information asymmetry between domestic and foreign investors by increasing both the quantity and quality of English disclosures.

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