Mandatory English Disclosure for KOSPI-Listed Companies with Assets Over 2 Trillion Won Starting May Next Year

Starting in May next year, KOSPI-listed companies with assets of 2 trillion won or more will also be required to make English disclosures. In addition, disclosure requirements will be strengthened so that shareholders can accurately understand the basis and amount of executive compensation at listed companies.

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The Financial Services Commission announced these measures in its “Plan to Improve Corporate Disclosure for Enhanced Capital Market Accessibility and Shareholder Rights” on November 16.

Currently, only KOSPI-listed companies with assets of 10 trillion won or more are required to provide English disclosures, but from May next year, this threshold will be lowered to 2 trillion won. As of the end of last year, 265 companies fall under this category.

The scope of disclosure items will also be expanded. The number of required items will increase from the current 26 to 55, covering all major management matters, as well as fair disclosure, inquiry disclosure, and other Korea Exchange disclosure items.

The submission deadline for disclosures, which is currently within three business days, will also be shortened. In principle, KOSPI-listed companies with assets of 10 trillion won or more must submit their English disclosures on the same day as their Korean disclosures. Meanwhile, companies with assets of 2 trillion won or more must submit their English disclosures to the exchange within three business days after submitting the Korean version.

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The financial authorities plan to implement a three-stage mandatory English disclosure policy by 2028. The main point is to require all KOSPI-listed companies to provide English disclosures. The scope of disclosure items will also be expanded to include statutory disclosures such as major matters reports, taking into account the situations in major countries and the burden on companies. For KOSDAQ-listed companies, the authorities are considering introducing mandatory English disclosures for large companies with assets of 2 trillion won or more.

Translation support will be strengthened to reduce the burden on listed companies. The translation turnaround time for the Korea Exchange’s translation support service will be shortened, and the number of eligible companies will be expanded.

The operation and improvement of the English disclosure platform will continue to be promoted to enhance the usability of English disclosure information for global investors. The infrastructure for English DART (Data Analysis, Retrieval and Transfer System) disclosures will be completed by the end of this year to improve service stability. In addition, the scope and coverage of the Extensible Business Reporting Language (XBRL), an international standard computer language, will continue to be expanded.

Information about executive compensation will also be expanded. Starting in May next year, shareholders will be able to more easily understand the relationship between corporate performance and executive compensation, as the total shareholder return (TSR) and operating profit for the past three years will be included in the executive compensation disclosure form. The reasons for granting and the calculation criteria for each detailed compensation item will also be specified in the disclosure.

Disclosure of stock-based compensation, such as Restricted Stock (RS), will also be strengthened. Both the total executive compensation and individual executive compensation forms will include stock-based compensation. In addition to stock options, detailed information on stock-based compensation granted to each executive will be disclosed separately by improving the form.

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Information related to shareholder meetings will also be expanded. From March next year, it will be mandatory to disclose voting results, including approval rates for each agenda item, at shareholder meetings. Specifically, the voting results for each agenda item will be disclosed on the day of the shareholder meeting. Regular reports such as business reports will also include the voting results for each agenda item during the reporting period. Currently, only the outcome of whether an agenda item has passed is disclosed, and information such as approval rates is not provided.

Incentives to spread out shareholder meetings will also be strengthened. For this year’s regular shareholder meetings, 2,432 companies (90.3%) held their meetings intensively between March 21 and March 31. To address this, the standard for determining the record date for voting rights will be changed, and incentives to encourage companies to hold shareholder meetings in April will be strengthened.

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When selecting outstanding disclosure companies at the exchange, additional points will be awarded for efforts to spread out shareholder meetings. The reasons for reducing penalty points for inaccurate disclosures will include efforts to distribute shareholder meetings. In addition, guidelines will be revised so that companies must state and disclose in their corporate governance reports whether they have amended their articles of incorporation to set the record date for voting rights on a day other than the end of the fiscal year, in accordance with the standard articles of incorporation for listed companies, and their efforts to distribute shareholder meetings.

The Financial Services Commission will hold a notice period for the proposed amendments to the “Regulations on Issuance and Disclosure of Securities, etc.” from November 17 to December 8. After review by the Regulatory Reform Committee and resolutions by the Securities and Futures Commission and the Financial Services Commission, the changes are planned to be implemented in the first half of next year. Amendments to the Korea Exchange’s disclosure regulations for the KOSPI market to implement the second stage of mandatory English disclosure will also be pursued.

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