1. Imposition of obligation to submit semi-annual and quarterly reports to corporations subject to first business report submission
A. Reason for revision
○ As the half-yearly and quarterly financial information on newly stock-listed corporations, etc. just before listing is not disclosed, investors have difficulty deciding investments; hence the need for improvement.
B. Content of revision
○ Newly stock-listed corporations, etc. are required to submit not only the business report for the fiscal year just before listing but also the half-yearly and quarterly reports just before listing to the Financial Services Commission and an exchange by the 5th from the date they become corporation subject to business reporting.
2. Deadline for submission of major report (Article 161 (1) of the proposal)
A. Reason for revision
○ There are cases where privately placed convertible bonds, etc., are issued without supplying existing shareholders and investors with sufficient information in advance, so improvement is needed to ensure that shareholders and investors are supplied with the relevant information with sufficient time.
* Most of the convertible bonds (CB) and bonds with warrants (BW) are issued through private placements without the obligation to submit a registration statement. As a result, there are cases where the fact of issuance is announced just before the payment due date.
B. Content of revision
○ In case an event specified by the Presidential Decree occurs, such as decision to issue convertible bonds, a basis for delegation is established to set a different deadline for submission of the report on major facts by the Presidential Decree so that shareholders or investors may be supplied with the relevant information with sufficient time.
3. Reasonable adjustment of the upper limit of fines for violations of the obligation to submit business reports, etc. (Article 429 (3) of the proposal)
A. Reason for revision
○ Improvement is required because violation in public disclosure by listed corporations has a relatively larger impact on investors compared with unlisted corporations, but there is a problem*, i.e., fines for some listed corporations are smaller than those for unlisted corporations in case of violation of business report submission obligations.
* The Financial Investment Services and Capital Markets Act sets the distribution disclosure fine limit at a fixed rate (10/100 of the average daily trading volume of the previous fiscal year (limit: KRW 2 billion)) for listed corporations and prescribes a fixed amounts (KRW 2 billion) for unlisted corporations.→ Small listed corporations may have a lower penalty limit compared with unlisted corporations.
B. Content of revision
○ The upper limit of fines for violations of business report submission obligations, etc. is increased from the amount equivalent to 10/100 of the average daily transaction amount to KRW 1 billion if the amount equivalent to 10/100 of the average daily transaction amount is less than KRW 1 billion in the case of listed corporations, but reduced from KRW 2 billion to KRW 1 billion in the case of unlisted corporations.
4. Increase the upper limit of fines for violation of reporting obligations on large stock holdings (Article 429 (4) of the proposal)
A. Reason for revision
○ An issue has been continuously raised because the penalty for violation of obligation to report large stock holdings (5% reporting obligation) is imposed at a significantly lower level compared to the penalty for other disclosure violations; hence the low effectiveness of sanctions.
B. Content of revision
○ The upper limit of fines for violation of obligation to report large stock holdings is increased from the “amount equivalent to 1/100,000 of market value” to the “amount equivalent to 1/10,000 of market value.”
