FSS: "New Business Progress and Plans Must Be Disclosed in Regular Reports"

From now on, the detailed progress and future plans of businesses added as business purposes in the articles of incorporation must be regularly disclosed in business reports, etc.

On the 28th, the Financial Supervisory Service (FSS) announced, "Starting from the 30th of this month, listed companies, etc. must regularly disclose the detailed progress and future plans of businesses added as business purposes in the articles of incorporation in business reports, etc." It added, "Even if there is no progress, companies must specifically state the reasons for non-pursuit and future plans to accurately inform investors." This revised format will be applied from this year's semi-annual report, and a focused inspection on compliance with the revised format will also be conducted in the second half of the year.

Under the current regular report format, companies could arbitrarily decide whether to include the progress of new businesses, but there were frequent cases where the progress and planning status were not disclosed at all even when new business purposes were added to the articles of incorporation. Accordingly, the FSS established a separate format in the regular report to mandate the inclusion of business progress when business purposes are added to the articles of incorporation.

The scope of preparation includes all businesses added as business purposes in the company's articles of incorporation during the disclosure periods of the last three fiscal years. The details added as business purposes in the articles of incorporation must be specified, and to allow verification of the company's actual business progress, each business purpose must include ▲business overview ▲business progress status ▲related risks ▲relation to existing businesses ▲future plans, etc. However, if there is no business progress, the reasons and background for non-pursuit must be stated, and to confirm the company's actual intention to pursue the business, the existence of plans within the next year and the expected timing of pursuit must be written.

Additionally, the FSS will also revise other disclosure formats related to the articles of incorporation. Since there was no format for stating business purposes in the articles of incorporation in regular reports, a new disclosure format has been established to include the current status of business purposes in the articles of incorporation, actual business operation status, and history of changes in business purposes. To prevent duplicate entries, it was also specified that additions to business purposes are excluded from the scope of the existing new business format.

An FSS official stated, "By checking the progress and plans of new businesses resolved at the shareholders' meeting quarterly, it will be possible to refer to investment decisions and prevent unfair trading such as false new business pursuits riding on specific themes." He explained, "The revised disclosure standards will be enforced from the 30th of this month and will apply from the regular reports submitted thereafter."

He added, "A focused inspection on compliance with the revised format for this year's semi-annual report will be conducted in the second half of the year."

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