As previously explained in our newsletter (Link), published in February 2023, the Financial Services Commission (“FSC”) issued a press release on January 19, 2023, regarding the enhancement of policies connected to overseas investment. In the release, the FSC indicated it was considering a “phased implementation of the English disclosure requirement” for large listed companies or those that conduct significant overseas investment.
Subsequently, on December 18, 2023, the FSC issued another press release (Link) confirming and revealing the main aspects of this “phased implementation of the English disclosure requirement.” The FSC announced that, starting from January 1, 2024, (i) KOSPI-listed companies with assets of KRW 10 trillion or more (excluding those with less than 5% overseas ownership), and (ii) KOSPI-listed companies with 30% or more of overseas ownership (with assets of KRW 2 trillion or more but less than KRW 10 trillion) will be required to provide disclosures in English within three business days after their Korean disclosures to the KRX. This will apply in cases of (i) matters related to closing financial statements (e.g., a decision on cash or in-kind dividends), (ii) matters concerning significant decisions (e.g., a decision on capital increase with or without consideration), and (iii) matters concerning the suspension of trading (e.g., a decision on stock cancellation).
To facilitate these requirements, amendments to the relevant regulations (e.g., the KOSPI Market Disclosure Regulations of the KRX) have been completed. As of January 1, 2024, the disclosure system is set to include a feature that automatically notifies companies of their English disclosure obligations upon filing their Korean disclosures. Additionally, an English disclosure form, along with a pre-formulated disclaimer, will be provided to facilitate use by listed companies. Services such as translation, an English table of contents, and form conversion will also be made available.
Following this first phase, the second phase of the “phased implementation of the English disclosure requirement” is set to commence in 2026. This phase will broaden the range of companies required to disclose information in English to include those listed on KOSPI with assets of KRW 2 trillion or more. It will also extend the list of disclosure items and may necessitate the simultaneous filing of both Korean and English disclosures in certain instances.
With the impending mandatory English disclosure requirement, large listed companies should prepare themselves to comply with the English disclosure process and be careful to avoid disclosures that may be inaccurate or misleading, which could lead to issues and potential liabilities.
