Over 40 Companies Delayed Business Report Submission... Administrative Sanctions Exempted Considering COVID-19

Decision on exemption from sanctions for the company and auditor to be submitted to the Securities and Futures Commission on the 25th

Financial Services Commission Chairman Eun Sung-soo attended the COVID-19 response party-government-Cheongwadae meeting held at the National Assembly on the 11th, listening to Chairman Lee Nak-yeon's remarks with a serious expression. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kum Boryeong] It has been revealed that about 40 companies have failed to submit business reports and other documents within the deadline due to the novel coronavirus infection (COVID-19).

According to the Financial Supervisory Service and the Korean Institute of Certified Public Accountants as of the 18th, about 40 companies applied for exemption from sanctions, stating that they could not submit business reports and other documents within the deadline due to the impact of COVID-19. Among them, more than 30 were listed companies.

The Financial Services Commission decided to exempt administrative sanctions such as fines imposed on companies and auditors for non-submission or delayed submission of financial statements, audit reports, and business reports if companies find it difficult to complete external audits within the deadline due to the spread of COVID-19 and quarantine measures. Accordingly, from the 28th of last month until today, the Financial Supervisory Service has been accepting exemption applications for business report submission targets, and the Korean Institute of Certified Public Accountants has been accepting exemption applications for other external audit targets. The application target is companies with a fiscal year-end of December 31, last year. The company must have major business sites or subsidiaries located in China or domestic special infectious disease control areas, or conduct significant business in those areas. Auditors who find it difficult to complete external audits within the deadline due to COVID-19 or office closures caused by COVID-19 quarantine measures are also eligible.

KOSDAQ-listed company Jenik announced the day before, "We requested an external appraisal of tangible assets (buildings and land) of our consolidated subsidiary Jenik Shanghai Cosmetics Co., Ltd. to an external appraisal firm on the 14th of last month, but due to the spread of COVID-19 and quarantine measures, movement within China is restricted, and local appraisers are working from home, causing delays in the appraisal. Consequently, the external audit for the 2019 fiscal year and the preparation of consolidated financial statements are inevitably delayed," and stated, "We have applied to the Financial Supervisory Service for exemption from sanctions."

On the same day, KOSDAQ-listed Dasan Networks also announced, "Our major subsidiary Dasan John Solutions and the auditor have started working from home following orders from the U.S. health authorities due to COVID-19, causing delays in the external audit schedule," and "We have applied to the Financial Supervisory Service for exemption from sanctions related to delayed submission of business reports, etc."

In the KOSPI market, companies such as KT&G, Seoyeon, SL, and Namsun Aluminum are included, while in the KOSDAQ market, New Pride, Hanp, Seojin Automotive, and Sambo Motors are among those included. It is known that Daehyo Hightech, Shin Saenghwal Cosmetics, Roganik Korea, Dongnam Precision, and Hanjin Chemical have applied for exemption from sanctions at the Korean Institute of Certified Public Accountants.

The Financial Services Commission will submit the review results of the Financial Supervisory Service and the Korean Institute of Certified Public Accountants to the Securities and Futures Commission on the 25th to decide on the exemption from sanctions for companies and auditors. Among the exemption targets, companies required to submit business reports must submit business reports and other documents by May 15, the deadline for the first quarter report. Companies that do not submit business reports must submit audit reports by June 15, which is 45 days extended from the existing audit report submission deadline. Companies that do not apply within the application period or fail to submit or delay submission of business reports will have the level of sanctions determined through individual review.