"Disclosure Obligations for Newly Listed Companies to Be Strengthened from July 22"

Starting from mid-July, disclosure obligations for newly listed companies and similar entities will be strengthened. Companies that are newly listed and thus required to submit their first business report must additionally disclose their most recent quarterly or semi-annual report within five days of becoming subject to the submission requirement. In cases where a company subject to business report submission decides to issue privately placed convertible bonds, bonds with warrants, or exchangeable bonds, they must notify at least one week before the minimum payment date.

According to the Financial Services Commission on May 21, these amendments to the Capital Markets Act and its subordinate regulations will take effect from July 22.

Previously, when a company became newly subject to business report submission obligations due to a new listing, there was no requirement to disclose the most recent quarterly or semi-annual report. As a result, investors were not sufficiently provided with up-to-date information about the company's business and financial status immediately prior to listing. To address this, the revised law requires newly listed companies to disclose, in addition to the previous fiscal year's business report, the most recent quarterly or semi-annual report within five days. Failure to comply may result in administrative measures under the Capital Markets Act, such as fines or restrictions on securities issuance for up to one year, as well as criminal penalties.

Additionally, under the previous rules, companies required to submit business reports had to disclose a material facts report by the day after the issuance of privately placed convertible bonds. Going forward, they must disclose the material facts report by the earlier of the day after the decision to issue or one week before the payment date.

The Financial Services Commission explained the reason for the change: "Since the fact of issuance was often disclosed just before the payment date, there was insufficient time for shareholders to file a legally permissible request to halt the issuance if the privately placed convertible bonds or bonds with warrants were in violation of laws or regulations." Failure to submit these reports may also result in administrative measures and criminal penalties under the Capital Markets Act.

The Financial Services Commission stated, "Through the implementation of the revised Capital Markets Act, we expect to minimize blind spots in corporate disclosure related to new listings and privately placed convertible bonds, thereby advancing the capital market and protecting investors." The commission added, "The Financial Services Commission, Financial Supervisory Service, and Korea Exchange will continue to provide guidance on the revised law and support companies in fulfilling their disclosure obligations."