The corporate disclosure system will be reorganized to reduce the burden on businesses and strengthen investor protection. In addition, environmental, social, and governance (ESG) information is included in the corporate disclosure.
On the 14th, the Financial Services Commission held a meeting with industry officials and private experts, presided over by Vice Chairman Do Gyu-sang, and announced a plan to improve the corporate disclosure system.
According to the improvement plan, the Financial Services Commission decided to reorganize the business report system to make it easier to understand, and to provide a’Business Report Bible’, a guide that explains the terms and characteristics of major industries for general investors.
Currently, the Financial Supervisory Service Electronic Disclosure System (DART) system, which consists of items unfamiliar to the general public, is also changing. The menu, which was organized according to the classification of the Capital Market Act such as periodic disclosure, issuance disclosure, and equity disclosure, will be reorganized by subject such as company status, financial information, governance structure, and investment risk factors, and the search function will be strengthened.
For companies, the preparation of quarterly reports was simplified. Quarterly reports, which had low utilization and high burden of preparation, will be reorganized to focus on core information, and disclosure items will be reduced by 40%. In particular, the burden on small businesses is expected to decrease. Small-scale companies will expand the subject of disclosure exceptions from’asset scale of less than 100 billion won’ to’asset scale of less than 100 billion won or sales of less than 50 billion won’, and the items omitted from disclosure are also increased.
Electronic issuance of investment prospectus is also activated. The investment prospectus is usually over 300 pages and incurred a cost of 100 million won per company for the written issue. In the future, in order to improve the problem of not obtaining consent for electronic issuance due to the inability to obtain shareholder contact information, the company plans to amend the relevant laws to create a basis for collecting shareholder contact information such as e-mail.
A plan was also included to facilitate ESG responsible investment. The voluntary disclosure of the’Sustainability Report’, which includes environmental and social information, is promoted in exchanges and mandatory step by step. It evaluates the implementation performance of the 2016 stewardship code (trustee responsibility principle), and reviews measures to strengthen trustee responsibilities related to ESG.
Sanctions for violations of disclosure regulations are also improved. It was decided to clarify the targets and standards for the imposition of penalties for non-submission of securities reports, and to impose penalties for non-listed corporations who regularly fail to submit regular reports.
The Financial Services Commission plans to promptly push ahead with tasks that can be carried out without amendments to the laws and regulations, while the revision of laws and enforcement ordinances will be pursued in the third quarter of this year.