Starting next year, listed companies planning dual listings or rights offerings must disclose their communication records with shareholders, including minority shareholders, in their corporate governance reports. If there is a plan for a rights offering that could dilute existing shareholders' stakes, specific details such as whether third-party allocation will be used must also be included in the report.
The Financial Services Commission and the Korea Exchange announced on the 6th a revised guideline proposal for corporate governance reports containing these measures to strengthen shareholder protection and encourage active shareholder returns. Currently, all 826 companies listed on the KOSPI disclose corporate governance reports.
Starting next year, if listed companies pursue dual listings or rights offerings, they must disclose △measures for shareholder protection and △communication records with shareholders, including minority shareholders, during the decision-making process.
In particular, if a rights offering that could dilute existing shareholders' stakes has been conducted or is planned, specific details such as △whether third-party allocation will be used, △the size of the capital increase, △the discount rate, △the purpose of fund usage, and △whether controlling shareholders will acquire shares must be disclosed.
In the context of the cumulative voting system becoming mandatory due to a Commercial Act amendment in September last year, measures are also being taken to prevent nullifying the system by adjusting the number of directors or their terms. Listed companies with total assets of 2 trillion won or more must disclose whether they will implement cumulative voting when appointing two or more directors. Additionally, if the number of directors or their terms is changed, △the reasons for the change and △the impact on the cumulative voting system must be additionally stated.
Disclosure of shareholder return status will also be strengthened to allow shareholders to directly request improvements in dividend policies. Starting next year, listed companies must include information on the acquisition, cancellation, and holding of treasury shares over the past three years in their reports.
They must also state in their corporate governance reports whether they disclosed the decision on final dividends and the dividend amount by six weeks before the general shareholders' meeting (the period when shareholder proposals are possible).
The practice of "cramming business report submissions" right before the general shareholders' meeting will also be prevented. According to the Financial Services Commission and the exchange, most listed companies currently disclose their business reports one week before the general shareholders' meeting.
Starting next year, listed companies must state the "business report submission date" in their corporate governance reports so that shareholders can receive the business report at least two weeks before the general shareholders' meeting. If the business report cannot be submitted by two weeks prior, the reason must also be explained. The option of including whether the business report was submitted two weeks before the general shareholders' meeting as a "key indicator" in the corporate governance report is also under consideration.
The Financial Services Commission and the exchange will conduct consultations and briefings for disclosure officers of listed companies starting this month to ensure that the revised guidelines are reflected in the corporate governance reports submitted next year.
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