Companies Must Include Compliance with 'Dividend First, Investment Later' Policy in Business Reports

FSS Revises Corporate Disclosure Forms Related to Dividend Procedures

The Financial Supervisory Service announced on the 19th that it will revise the corporate disclosure format to require companies to specifically state whether they have implemented the dividend procedure improvement measures in their business reports.

This is to encourage more companies to participate in improving dividend practices. The Financial Services Commission and the Ministry of Justice announced dividend procedure improvement measures last January to align the domestic corporate dividend system with global standards.

Until now, the year-end dividend system required listed companies to confirm shareholders eligible for dividends (dividend record date) typically at the end of December each year, decide the dividend amount at the shareholders' meeting in March of the following year, and pay dividends in April. The improvement plan separates the shareholders' meeting voting rights record date and the dividend record date during year-end dividends, designating the dividend record date after the shareholders' meeting.

The Financial Supervisory Service noted that since the current descriptions of dividend policies in business reports are generally theoretical, companies will now be required to include information related to the current articles of incorporation's dividend decision-making body, whether the dividend procedure improvement measures can be implemented, and future plans.

Companies must also disclose whether year-end dividends were paid during the business report period, the date the dividend amount was finalized, the status of setting the dividend record date, and whether dividend predictability is provided.

According to the Financial Supervisory Service, 42.3% (1,008 companies) of listed companies on the KOSPI and KOSDAQ markets have reflected dividend procedure improvements in their articles of incorporation, and 109 listed companies actually paid dividends following the revised procedures in the first year of implementation.

The Financial Supervisory Service urged, "Companies that have already revised their articles of incorporation are expected to determine the dividend amount through the shareholders' meeting and then decide the shareholders eligible for dividends starting from this year's year-end settlement." It also requested, "Companies that have not yet revised their articles of incorporation should participate in improving dividend procedures by amending their articles of incorporation."

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