1.

Encouraging Listed Companies to Voluntarily Pursue Corporate Value-Up Initiatives
 

(1)

Guidelines will be established for listed companies’ voluntary disclosures of their corporate value-up plans.

The KRX will establish and provide advisory guidelines for principles, details, and methods regarding the disclosure of corporate value-up plans so that listed companies can voluntarily develop corporate value-up plans tailored to themselves and disclose and implement them in the mid-to long-term.

According to the above guidelines, listed companies, led by their board of directors, will be advised to draw up mid-to long-term corporate value-up plans every year and voluntarily disclose the plans on their websites as well as the KRX’s website on an annual basis, so their board of directors can play a responsible role as the actual highest-level decision maker for matters relating to business management and administration. Specifically, the disclosures should include (i) the company’s self-evaluation of the adequacy of its corporate value based on multifaceted analyses of its capital costs, profitability, and corporate governance (identifying current status), (ii) mid-to long-term goals (with a term of at least three-years) to improve capital efficiency and their estimated time of completion, (iii) detailed management strategies and the timeline to achieve the goals and connectivity between the goals and plans (preparing plans), and (iv) an evaluation of the implementation of the plans and achievement of the goals and feedback from shareholders and outside investors (evaluating implementation and communicating with investors).
 

(2)

Incentives will be provided to encourage voluntary participation.

To encourage listed companies’ participation in voluntary disclosures as mentioned above, benefits and incentives will be provided as follows: (i) tax benefits, (ii) awards for outstanding disclosure practices, (iii) priority in the selection of exemplary taxpayers (who can enjoy special tax benefits), beneficiaries of R&D tax credit, and participants in the Government’s consulting services in relation to corporate income tax deduction or exemption as well as tax correction claims reviews, (iv) consulting services relating to family business succession, and (v) additional points in the selection of companies with outstanding disclosure practices on the KRX’s website. In addition, listed companies’ status of disclosing their corporate value-up plans will be examined and published on the KRX’s website in detail. Furthermore, the KRX revealed that it would examine whether listed companies have participated in and implemented the Corporate Value-Up Program every May, starting from 2025, and publish a white paper that compiles outstanding disclosure and implementation cases.
 

2.

Assisting Investors in Assessing Best Practice Companies and Making Investment Decisions
 

(1)

A new Korea Value-Up Index will be developed and exchange-traded funds (“ETFs”) will be listed.

The KRX will develop a Korea Value-Up Index composed of best practice companies (i.e., listed companies with proven records of profitability) and companies expected to achieve higher valuation (corporate value-up awardees) and assist investors in evaluating companies’ corporate value-up efforts and achievements for reference in their investment decisions. Specifically, the KRX revealed that it would develop a Korea Value-Up Index composed of listed companies expected to achieve corporate value growth through sustainable profit generation and shareholder return after reflecting feedback from asset managers in the third quarter of 2024 and list ETFs in the fourth quarter of 2024.
 

(2)

Stewardship Code will be revised.

The Stewardship Code Guidelines, which provide for institutional investors’ selection of shares and exercise of shareholder rights, will be revised in the first half of 2024. The Guidelines will state that institutional investors must check whether their contemplated companies have developed and implemented corporate value-up plans and communicate with investors so that investors, including pension funds, could consider companies’ corporate value-up efforts in making investment decisions.
 

(3)

Comparative data of major financial indicators will be published.

Starting in June 2024, the KRX will publish on its website the financial indicators (e.g., PBRs, price earnings ratios (“PERs”), and return on equity (“ROE”)) of all companies listed on the KOSPI and KOSDAQ every quarter and their annual dividend payout ratios and dividend yield ratios every year to provide accurate comparative data of major financial indicators. In doing so, the KRX will not only publish companies’ financial indicators but also provide their rankings in major financial indicators and recent five-year financial indicators data by categorizing them into business sectors according to the Global Industry Classification Standard.
 

3.

Building a Support System for the Corporate Value-Up Program
 

(1)

A dedicated support system will be established.

In February 2024, the KRX established a new dedicated team to continue to support the Corporate Value-Up Program, and on March 7, 2024, it launched an advisory board composed of academia, the investment sector, and companies to support the implementation, supplementation and improvement of the Corporate Value-Up Program. In addition, by June 2024, the KRX will open a new integrated website for the Corporate Value-Up Program in its electronic disclosure system (called KIND) so investors can easily find disclosures related to listed companies’ corporate value-up plans.
 

(2)

The KRX and related institutions will support joint investor relations (“IR”) meetings to encourage participation and hold town hall meetings with listed companies throughout the year.

The KRX revealed that it would encourage listed companies not only to disclose their corporate value-up plans and efforts to implement them, but also to proactively promote such plans and efforts to global investors. The KRX and related institutions will support corporate value-up awardees and companies selected by the advisory board in jointly organizing IR meetings. The KRX will also hold town hall meetings with listed companies in cooperation with the Korea Listed Companies Association (“KLCA”) and KOSDAQ Association throughout the year in furtherance of effective communication with listed companies.
 

(3)

Support will be provided for voluntary disclosures.

In addition to the foregoing, disclosure training will be provided to officers and employees responsible for listed companies’ disclosures to facilitate their understanding of the purposes behind the Corporate Value-Up Program and how to establish corporate value-up plans. Moreover, consulting in respect of establishing corporate value-up plans and English translation services will be arranged for small and mid-sized listed companies.